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COVID-19 created problems and opportunities for investment bankers. Enumerated below are the issues and how the credible IBankers (IB) would handle them.


1. Many companies succeeded in spite of themselves, especially if they had a robust Internet presence and processing system. The primary question is: Can this increase in revenue and profits be sustained as COVID subsides and we return to more normal activities?

There is no standard answer. We suggested that they not “go to market” right away. Rather, they should wait for two or three quarters to pass to examine how much of the upward blips are real and continuing. The same applies to a particular product acceleration, such as a sanitizer or thermometer. Will the growth carry over into 2021 and beyond?

2. For firms who suffered losses in 2020, what lessons did they learn? Can they document the COVID effect that was beyond their control? We suggested in mid-2020 that it behooved each company to clearly document how COVID was impacting them. Or at least go backward and explain how revenues, gross profit, employee costs, and other variable expenses were affected. Then, we can recast the COVID financials.

3. Multiples are the name of the game, so long as the adjusted EBITDA is readily supportable. There is no absolute trend line for all multiples. Obviously, they vary by industry, industry sector, revenue size, growth realized and anticipated, etc. For clients that have distinct product lines, carefully crafting each as a separate cash flow (properly allocating overhead) may well result in the application of varying multiples appropriately weighted for optimum impact. One of our sell-side prospects experienced substantial growth in revenues and profits, largely attributed to COVID. Make sure the multiple(s) quoted is realistic.

4. Customer concertation has a unique stigma in pricing a transaction. In some industries, having only a few customers is not a negative, just a reality. The keys to analyzing customer relationships and their impact on value are:

• how will the loss of a large customer impact the cash flow?

• what is the rate of customer attrition?

• does the firm focus on and grow customer revenue from the point of entry?

• is the buyer allowed to interview key customers?

5. Does the IB really understand what drives value in your firm? Can they quantify IP and personal goodwill? We can and do. Part of our IB team includes senior valuation analysts with specific experience in an industry; each value driver is carefully explained as part of the client story.

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