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Article June 25, 2020

Recent deals: Transaction liability

The COVID-19 outbreak continues to dominate headlines across the world and the focus of governments and regulators alike. As a result, trends in global M&A have changed significantly.

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Since the beginning of the global outbreak, CFC has seen a c. 40% reduction in the number of submissions received in comparison to the same period last year. In addition, deals are taking longer to execute and close.

Despite the slowdown in deal flow, we’ve continued to underwrite through the challenges posed by the pandemic and are already seeing green shoots of recovery in the lower-middle market space. 

We’ve taken a proactive approach to dealing with issues such as the disruption to global supply chains, impacts on workforces and reductions in demand in certain sectors (see our article on Will COVID-19 impact your deal?).

Take a look at some of the more interesting deals we’ve worked on since the beginning of the pandemic in March 2020.

Automotive lifestyle
Deal size: 70,000,000
Limit: USD 10,000,000
A standard bolt-on acquisition for a longstanding private equity client who was seeking to bolster their existing platform company. The target was a founderowned
auto care lifestyle brand which had maintained strong revenue and EBITDA despite the COVID-19 pandemic.

Backing beauty
Deal size: USD 100,000,000
Limit: USD 10,000,000
Acquisition of a leading developer and manufacturer of beauty products in the US with a focus on underwriting through international regulatory compliance issues
caused by the pandemic.

Cleaning products
Deal size: USD 34,000,000
Limit: USD 7,000,000
As a result of COVID-19, a private equity client identified an opportunity to acquire a business that designs, manufactures and distributes bespoke cleaning products for specialist IT equipment.

Essential water
Deal size: USD 92,000,000
Limit: USD 9,200,000
Acquisition of a water treatment company which was declared an “essential business” by US authorities due to its involvement in critical infrastructure and specialized service repairs across American municipalities.

Water tank manufacturer
Deal size: USD 60,000,000
Limit: USD 9,000,000
The target, a manufacturer of large industrial water tanks, had seen an increase in revenue from municipal and federal clients as a result of COVID-19. CFC underwrote through the various challenges they faced implementing socially distant working practices and increased delivery times from suppliers.

Aerospace development
Deal size: USD 55,000,000
Limit: USD 5,000,000
The strategic acquisition of a company specializing in the development and production of complex aerospace airframes for leading military and commercial
aircraft manufacturers across North America. The target was insulated from the downturn in global aviation as a result of its focus on federal clients.

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