Taking a page out of Sun Tzu’s “The Art of War,” some analysts see big opportunities in the chaos being created by the COVID-19 pandemic.
In sectors already prone to consolidation, for example, changing costs of capital and liquidity will likely lead to some interesting mergers and acquisitions.
That’s according to Brian Wieser, global president of business intelligence at GroupM, who suggests that such activity could include “transformational combinations.”
As a result of significant stock price disruptions, industries could also witness what Wieser calls “tuck-in transactions,” which involve larger companies buying much smaller ones.
“Weak stock prices and cheap capital mean companies that are cash-rich are well positioned to make acquisitions of companies that are particularly depressed,” Wieser writes in a new note to clients.
Among other likely suitors spanning the social media, marketing, and tech sectors, Facebook and Apple are renowned for reserving massive sums of capital.
“Although transactions are not typical in times of great uncertainty … or at least great volatility … in certain instances some companies could be at risk of a takeover,” Wieser reasons.
Transactions are not likely in the early stages of the current stock market correction, but Wieser suggests that they will become more likely as markets recover unevenly and the outlook for businesses become clearer.
Meanwhile, all the market turmoil stemming from COVID-19 means that startups will probably be putting off their IPOs.
More broadly, marketers around the world are just beginning to assess how to address rapidly evolving circumstances.
“Some markets have had more time to adapt and marketers have adapted within them,” according to Wieser. “Spending declines, however, are still likely as media owners have indicated in their guidance.”
Globally, marketers are slowly adapting to the “new normal” with business and leisure travel, retail, food and beverage and entertainment all suffering from the absence of travel, employees working from home, and “social distancing” among many consumers.
That said, the changes impacting societies around the world do not necessarily mean that individual marketers should alter their media strategies, Wieser believes.
“Marketers need to be mindful of long-time horizons during crises and make decisions on this basis,” he suggests. “We emphasize that marketers should continually assess the relevance of a given medium for a given marketing strategy and creative message.”
Enterprising marketers should also being looking out for ways to add value to the consumers they serve, the media owners they buy from, and the societies in which they exist.
Added Wieser: “A crisis like this will have many unfortunate consequences, but the changes in behaviors that will follow could create new opportunities for marketers to engage with all relevant stakeholders.”