YouSaid · the spoken record

Scott Barshay

lines on the record: 25
first: 2020-06-23
most recent: 2020-06-23
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I got a COVID puppy, which is a tremendous silver lining. I'm a big believer that you shouldn't have a dog unless you take the time to train your dog and to take your time to train your dog. You have to be around. I might have this number wrong. I think I collectively have eight million miles across four major airlines. I haven't flown on a plane in quite some time. So silver lining, I was able to get a new puppy and I'm around to train it.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“Is just over the course of many crises and many peaks as well, realizing it's never as good when it's good as you think it is. And it's so far, it's never been as bad when it's bad as you think it is. We are all creatures of extrapolation and what we're best at doing is extrapolating right now and just having a perspective that everything that we're going through right now is very, very real, but it doesn't mean that we'll have the exact same right now six months from now or 12 months from now. And markets, people, societies, politicians, people react to what's going on and things change. And there's an optimism built into believing that things change. And I think you see some of that in the market today. I certainly see it in the attitude of a number of my clients right now in awareness of where we are at the moment.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think the great mentors that I've had over the years in my business, and effectively that entire time I've been focused on M&A since 1986, and M&A is a client business and a people business as well and running an M&A business is a people business with the people underneath you. The mentors, the clients, the people that I respect the most that I've learned from candor and communication is far more important than knowing what's going to happen next. And when I've watched either clients or leaders slow down their communication, slow down their empathy because they don't know what to say about what's coming next, it turns out people would rather hear from you than know that you're right about everything. And that stuck with me. I think the other thing that has stuck with me”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“Tours. I think some of that is going to stick around. I hope some of that sticks around, but I can also tell that in a business that to some extent is based on trust, deciding when you believe what someone is telling you and when you need to dig deeper, it's going to take a little while before people don't want to complement the video with the in-person. On valuation, I think that the more interesting question is going to be the world has become pretty comfortable building 10-year models and if you needed a reminder that 10-year models aren't always right, just grab any model from January of 2020 and see how you're doing so far. And so I think what we might see is a little bit less reliance on the discounted cash flow analysis and a little bit more, I don't even want to say conservatism. I want to say a little bit more awareness of volatility or surprise.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“Relative to a small volume, I've been quite surprised how seamlessly people have moved to video diligence sessions. It's the same slides, but it's a voice and a face on a screen instead of in a room. Interestingly, we used to only be able to handle often one potential buyer a day with the management team just because of logistics. And if somebody's going to fly to town, we need to have dinner with them, need to. We want to have dinner with them the night before. We want to spend time and all of a sudden you're having one meeting a day. It might only be a four-hour meeting. Well, you can comfortably do two four hour meetings a day with different buyers when it's all remote. We've actually been able to move things faster. We've been involved in situations where we've had handheld and even drone videos represent facilities.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“Well, I'm going to break this into two pieces. I'm going to answer the process question, but then I'm going to come back to the valuation question in a moment as well. On the process question, you're largely right. M&A has been heavily”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“So we're obviously all working a little differently, at least at the moment, the last several months. You've been around deal making for a long time. It hasn't changed all that much, although you can tell us what's changed significantly. Do you think the way in which we work differently will change anything about the M&A process going forward? Yeah.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“One reason is in the last six months what's going to happen becomes more obvious perhaps. Certainly that was true for some elections, not for all of them notably. But the second is that there's a moment in time for people to move very quickly and announce M&A if they believe there's going to be some changes to regulations or tax or anything else that would impact their ability to get a deal done. So I certainly anticipate if there's some normalization this year would look like prior presidential election years, which is the latter half of the year represents a basis for an uptick of activity relative to the first half of the year just as some things become more obvious. We'll see if that plays out.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“It bunches because people choose to engage in it when they like the price, but MA has to happen. So when we miss 12 months of M&A in a downturn, it doesn't mean that the natural life cycle of those companies has changed. It just means that it's shifted. So I fully expect M&A to normalize and recover because all those deals that aren't happening right now, some significant percentage of them are deals that will happen. And so then it's a question of when will they happen. I had already commented that the beginning of the year in the U.S. was starting to be impacted by the upcoming presidential elections. In fact, if we look over the last four presidential elections, M&A had averaged in the first six months of the year down about 30% relative to prior year. Interestingly, it had averaged flat to up in the last six months. Why might that?”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“Look, when we measure M&A over a long period of time, one of the things that you quickly become reminded of is that most M&A is the normal access to capital that sort of drives investment, productivity, creation of new companies, et cetera, and measured over any extended time period, it's been a very consistent percentage, for example, of the total amount of capital spending in the United States. Big companies that were going to expend capital and generate a return on spending capital, M&A is part of that. Smaller companies that have created something new want to be rewarded for what they've created that might be new. And that becomes M&A. And so I describe M&A through cycles as a finite amount of activity that bunches.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“So, we do need more data points. That'll take time. So, a little hard to forecast, but do you see any trends that you think will be likely in just the tail end of this year as people start to get a little bit more certainty about what the future holds? Yeah.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“Interested in selling, but a buyer shows up and makes a hostile bid, you might be an involuntary seller who thinks there's a better date to sell, but you need to deal with the fact that you're negotiating price or you're dealing with how a buyer might act right now. So that category of involuntary M&A has typically been the first wave of M&A to recover coming out of crises. I think that may be the case coming out of this cycle as well. But again, because this crisis is so very different, it may be that the recovery ends up very different as well.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think we're going to need more data points to find out. As I mentioned, the volume of activity is low enough right now that it's very hard to see precisely what's going to drive sellers decision-making. What M&A requires more than anything else to get that overlap between a buyer and a seller is a moment of time of enough stability that the odds that the future that one side is looking at bears some resemblance to what the other side is looking at. Now, the exceptions to that coming out of crisis has been a category of M&A that I call involuntary M&A. Some people have to sell things because they need money, right? If you lost enough cash flow during the crisis and you can't access capital, you might need to sell a division. If you end up in bankruptcy, the bankruptcy might result in the sale of a business. If you're a public company who isn't”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“So, how's that dichotomy changed the way people think about deploying capital right at this moment? Obviously, capital is pretty cheap. It's pretty cheap for buyers who want to finance deals, but it's also cheap for sellers who want to live to see another day. How's that played out?”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“Well, the first observation I'd make is there's a false equivalency in trying to compare the real economy to market valuations or what some people would call the market economy and the false equivalency is a belief that they're somehow measuring the same thing. The real economy is measuring right now. It's a snapshot and it's a depressing snapshot right now. There are some reasons for optimism.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“So the markets obviously rallied since then, and there seems to be a disconnect between the quote unquote market economy and the real economy, which is still suffering pretty dramatically. What does that mean for how companies think about their valuations, both buyers and sellers? And how do you see that dynamic playing out in the months ahead?”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“To provide capital quickly to a company whose balance sheet maybe wasn't ready for revenues to go to zero for three months. And let's put that into the category of rescue financings, but that's really all that we saw. Because beyond that, in the same way that a buyer might say, this is a great time to act, there are very few sellers that were saying, I've been waiting for this moment of low prices and uncertainty to choose to capitalize the future. This will be a problem going forward. I think we're more likely to have a shortage of sellers than we are to have a shortage of buyers.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“So, the challenge of MA is you need both a buyer and a seller. And I will say that the number of buyers who raise their hand and said, I'm here, and if it's critical and important, I would be willing to act in this moment of crisis. And positioning it as a way to help. But really what they're saying is I'd like a bargain. One of the things that was holding me back was valuations. And now there's a moment can I act? The problem is when those hands go up, there are very few sellers who say, gosh, we're two weeks into a crisis. Now's the right time for me to sell. And so what we saw was a series of transactions that interestingly we think of a little bit as M&A, but others might think of as financings where people took stakes in public companies, equity stakes in public companies. We sometimes call them pipes, private investments in public.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“So, you said one of the potential inhibitors to emanate before the crisis really hit was that things were priced to perfection. Obviously, prices came down quite dramatically from February, from March into April. Were there some buyers who maybe weren't doing anything but were eyeing those prices and trying to act and looking at deals that they had thought were unthinkable in the past? Or was it just silence?”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“It was immediate and so immediate that you could feel a difference from a Friday to a Monday as the shutdown orders went into effect and simultaneously some of the visuals that had been hinted at from Wuhan that had been hinted at from northern Italy all of a sudden were on people's screens in New York City of a healthcare system that was overwhelmed and governments literally shutting down the mobility of people to deal with the spread. I would say it was almost absolute. We got a couple of deals signed up. The market really started to decline on February 19th. So if you looked at the stock market, the decline in the stock market really began February 19th, February 20th, but it really wasn't until the shutdowns and the That effectively all MA simply went sil”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“So obviously you pointed to the shift in sentiment. COVID was around in the earlier part of the year, but it really hit the US and Europe in mid-March and became more of a global health crisis and an economic crisis as the shutdowns intensified. Was that shift in tone that you saw from clients in mid-March immediate?”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“Crisis hit, and we're starting to climb out of that. But at the financial crisis, the most recent large crisis, the Great Recession, M&A declined materially, but not every deal that was being worked on did both sides collectively agree to put their pencils down and say there's a better time to have this conversation. That happened across the board and around the world with COVID.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“That's harder when there's a disagreement on what the future might be. Since COVID, we've seen something very different, layering on top of what I've just described has been a human crisis. And a human crisis is very different than a financial crisis because in a human crisis all of the things that lead to the willingness to make strategic decisions about M&A simply slot in much further down the list relative to the important demands on management boards, owners associated with dealing with employees, communities, and other things. So relative to other, frankly, crises and changes in markets that I've watched since the mid-80s while I've been at Goldman Sachs, M&A went to zero almost immediately as the COVID-19”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“And get to an overlap in price. It was becoming more difficult for buyers to meet sellers' expectations based on where earnings, where companies were being valued in the public market. So that clearly had an impact on the M&A market. At the same time, you had an awful lot going on, both internationally and locally politically and both global M&A, cross-border M&A had been declining for much of the last year and a half, but then very specifically in the United States, I think there started to be some focus on the upcoming presidential election and depending on who you thought would win that election, what you thought earnings or earnings momentum might be for the next four or five years came out very differently. And I joke with clients sometimes that M&A is the art of pain for the future before it's happened.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT
“There's a lot packed into that question. Let me start with pre-COVID. In the first month and a half, two months of 2020, we actually saw a market slowdown in M&A activity globally and in particular in the United States. Now, it's difficult to assign trends to two months of data, but order of magnitude the M&A business, the announced transaction activity was down plus or minus 40% relative to prior year. We were expecting a year that would be down relative to prior year, maybe not down 40%. But what was causing that? I think there were two things causing that. Around the world, valuations had become elevated and very full. I always believe it's magic that any buyer and seller can agree on a transition.”
2020-06-23 · Goldman Sachs Exchanges · How COVID-19 is Impacting Companies’ M&A Strategies · IDENTIFIED FROM THE TRANSCRIPT