COVID-19 might have chilled some business deals and investments, but corporate attorneys are cautiously optimistic about the future for both startups and private equity deals as states gradually reopen.
However, this isn’t to say that there haven’t been industries or companies affected by the economic disturbances.
Mike Dill, corporate partner at Holland & Hart, discussed private equity and venture capital and how both are experiencing the activities, slightly differently in the markets.
“The general theme, as you would imagine, is that deal flow and activity has dropped,” Dill said, adding that a big drop occurred in May. Much of what was in the works and far along continued on and closed or finalized around mid-to-late April.
Julie Herzog, corporate attorney with Fortis Law Partners and business consultant, said it was hard to say if there was a large change since January. She said she saw a large decline in transactions from March to May and saw companies and venture capital buyers put deals on hold because of the “tremendous” uncertainty caused by COVID-19.
Many early stage deals did not reach closing or finalization in the private equity and venture capital spaces, Dill said. Dill had seen some deals fall apart right away, and even a few near the finish line in March. Some seemed to dry up overnight due to firms not wanting to make capital calls on their investors.
“And even the deals that didn’t totally die, even a couple I had that were pretty far along, were pushed off to closing now,” Dill said, adding it was reaching a point where things were beginning to close. “Still some activity in that space, I don’t feel that dropped off quite as radically as the M&A space did.”