CEO of Media Direct, Scott Hirsch is widely known as a marketing pioneer and an authority on e-commerce and the online marketplace.
As a result of COVID-19, a number of industries are suffering – experiencing profit loss, mass layoffs, and fragmentation. While travel and hospitality businesses have taken the brunt of the economic blow, other industries aren’t far behind – sports, entertainment, retail, and oil; everyone is feeling the effects of the pandemic on the economy.
But amidst all the turmoil and disruption, COVID-19 has also created opportunities for mergers and acquisitions (M&A) on an unprecedented scale. “There are bargains to be had, niche markets to be cornered, and economies-of-scale to be achieved,” says Scott Hirsch, a long-time C-suite marketing executive. “It just makes sense – as businesses flounder and fail, Mergers and Acquisitions are how we save jobs, keep products alive for their consumers, and help prop up the economy. As an investor or business owner, it’s the perfect time to look at your industry and ask, ‘How can we consolidate?'”
The Precedent for M&A During an Economic Crash
In the late 90s, after the dot-com crash, the tech and internet industry had to undergo a tumultuous transformation. “Closings left and right. There were orphaned companies everywhere. The people who came out on top after the crash were the entrepreneurs with an eye for roll-ups,” explains Hirsch.
At the time, Scott Hirsch had already rocketed Lens Express into Inc.’s top 500 fastest-growing companies by introducing them to the earliest forms of digital marketing and e-commerce. Then he went on to found eDirect, an industry leader in permission-based email marketing.
“I oversaw the merger between eDirect and Naviant, as well as the roll-up of four other data and marketing technology businesses. With all of those resources and talents at our fingertips, Naviant quickly became the leading collector of opt-in consumer data through product warranty registrations,” explains Hirsch. “M&A are a way to give new life, a new direction to an entire industry. Instead of directly competing, now all of those companies are working to innovate with resources they never could have dreamed of before.”
The new Naviant entity was sold a few years later in 2002 to Equifax – for a staggering $135 million.
Scott Hirsch Says Now Is the Time to Buy
While there has been an overall drop (or pause) in acquisitions across all industries, there are still many companies and executives pursuing acquisitions. Hirsh explains their strategy:
“For skilled acquirers with strong stomachs, buoyant stock prices, strong balance sheets, or the necessary credit, now is the time to ‘pick your dance partner’ in the most promising growth solutions, technologies, and sectors. If you get there first while other prospective buyers are still in shock or waiting to see what happens, you can get what you want for a steal.”
“These are extraordinary and difficult times,” says Scott Hirsch. “But they’re not exactly unprecedented in terms of the marketplace. We’ve seen these kinds of crashes before – in 1929, in the late 90s, in 2008…it’s time to learn from the companies and entrepreneurs who came out on top in those situations. Buy when the market is low.”
Hirsch isn’t alone in his opinion that now is the perfect time for acquisitions, mergers, buyouts, and roll-ups. Warren Buffet recently revealed in an interview with CNBC that he is making moves to buy several businesses he’s had his eye on. And the Charles Schwab – TD Ameritrade merger is a perfect example of how companies can combine forces to save jobs and survive – albeit in a new form.
“The pandemic is leaving a wake of destruction behind it, but that means that the smaller building blocks needed to create larger, stronger, more profitable entities are now available in a way they never would have been previously,” enthuses Hirsch.
Business Value Can Be Found in Every Sector
In April alone, bankruptcy claims increased by 26 percent. “I predict that bankruptcies will only increase as summer continues,” says Hirsch. “I’m urging all of my fellow entrepreneurs and business owners to be on the lookout for bargains that can help you take your business to the next level. Partial acquisitions, mergers, buyouts…you have to look for opportunities to increase your critical mass while supporting growth and creating jobs.”
We asked what potential buyers and investors should be looking for when they’re considering M&A. Scott Hirsch provided us with a few helpful tips and questions to ask yourself:
“Is there a new technology under development that you could salvage? Is there an entity in your industry that, when merged with yours, could make you an industry player or powerhouse? Keep your eyes open, do your due diligence, and make sure you’re taking the long view,” advises Scott Hirsch.
Scott O Hirsch is a well-known serial entrepreneur that’s built and sold multiple $100M brands through innovative digital marketing. He’s been accredited as a co-founder of email marketing and many of today’s most popular display advertising tactics