A business ‘Covid story’ will help in a new world

I expect that most of our lives have changed in some shape or form throughout the pandemic. For the business community, the likes of CEOs and CFOs will be able to say the same about their organisations.

As business leaders look to move forward into a future shaped by the virus, many will consider how to attract further investment and secure debt to fuel their ambitions. No doubt, some business owners may also have an eye on finding a buyer so they can make an exit.

When embarking on such a process, we see that being able to tell a coherent ‘Covid story’ will be essential to the ears of those writing the cheques.

We know that 2020 has been a daunting year for many. But, to use a common, but apt proverb, necessity is the mother of invention.

We’ve seen management teams deliver significant business change in weeks, even days, where normally similar activity would take months, perhaps years.

While we’d all prefer this to have happened in more positive circumstances, the pandemic and businesses’ response has shown what can be achieved. And, arguably, the health crisis has simply fast forwarded many changes that were already in motion – such as the transition to more flexible working and omni channel business models. It has also encouraged some businesses to take a more forensic look at costs and efficiencies and challenge old conventions that might improve profitability.

So, when we consider how we tell a business’ ‘Covid-story’, it means capturing what has happened to your business since the start of the pandemic – from the ground, up.

It is about getting into the detail and asking how your business has changed operationally – from the products and services you offer and the channels you use, to the day-to-day functioning across departments and how the profile of your workforce has evolved. And, course, how it has fared financially on the balance sheet and profit and loss account – what income or costs were one off and what is sustainable in the longer term?

So, what does this mean for dealmaking?

Historically, investors have used past performance as an indicator of a business’ current state and as a hint to possible success in the future. In a world where trading conditions can change daily, that is incredibly hard to do now.

As such, we’ve seen the focus of due diligence on transactions shift. Not only will analysis consider long term trends, it is also increasingly crunching through data and information on the business’ performance in recent days, weeks and months.

Investors want to put data to the narrative so they can see how a business is operating right now. They want to understand how your customers have responded to the changes you’ve made and what evidence you have to show that the business has the resilience and agility to survive the current trading conditions.

Some might think that the uncertainty makes due diligence redundant. In fact, it is quite the opposite. More due diligence is being commissioned than we’ve ever seen before. And, it’s not just about the numbers - we’re increasingly seeing potential investors doing technology due diligence.

Investors are looking for robust technology that underpins a business’ proposition. They want to understand how sticky it makes your customers, how it is embedded into an industry and business, how scalable, defensible and resilient it is, particularly in an environment when cyber-attacks are on the increase.

For us, this shows that we can’t see the pandemic as a blip. News of vaccines may lead some to think that we will return to ‘normal’.

In reality, whatever happens, businesses and the models we have all based commercial decisions on have changed forever.

Even if you aren’t looking for investment, articulating that ‘Covid story’ will help you make sense of where you stand in this new world, show how far we’ve all come and what the future might look like.

If anything, after such a volatile year, I think we could all benefit with taking a moment to take stock before we head into 2021.