Has COVID killed mid-market private company M&A? Well, about 60% of it. And it has changed the other 40% in certain ways. As to the future? See below for Q-3 report and expected trends, per GF Data:

Deal volume was down c. 60% in Q-2 and continued to lag. The best deals got done. Quality meant a decline in need for warranty insurance, a likely trend with temporarily falling cost from those insurers still active; increase in claims may halt price declines, increase retainage.

Although some deals relied on earn-outs for price protections both ways, the bigger trend was to roll-overs (principal sellers putting between 10% and 35% of proceeds back in as forward investment). This gave buyers confidence, and also cut down on subdebt and senior debt (which were harder to get), those strips being filled by seller investment. Further, since the better deals got sold, price multiples remained strong.

What had leeway in terms of investor metrics? Deals got done where revenues were maintained; allowance was given for increased expense on the supposition that COVID was not permanent.

Family offices were thought to be slow to act, and the good deals went down fast, so not a major season for family shops.

The future? As running a company has become less fun these days, sell-side brokers note an increase in companies coming forward for sale. For deals already in the pipeline, fear of upwardly revised cap gains tax rates for 2021 (if Biden prevails) may increase seller pressure for a 2020 close (query will it also thus soften seller pressure on price and deal terms)?