That’s the assessment from panelists in the “M&A Trends in a Pandemic World” session at Transact Connect, the Electronic Transactions Association’s virtual conference underway this week.

What’s also different about M&A deals during the Covid-19 pandemic is that not as many are getting made as was the case earlier this year. In fact, very few deals are getting done now, said Greg Cohen, managing partner at PayXAdvisory, Los Angeles, and operating partner at Lovell Minnick Partners, a Radnor, Penn.-based investment firm. Some of those that are getting done are smaller or may involve recapitalization.

Yet other deals may move forward when an investor is looking for a high-value deal, said Angela Zhang, principal GI Partners, a San Francisco-based private investment firm. “However, others are waiting for Covid to be in the rearview mirror,” she said.

One reason for the slackening is that due diligence processes are taking longer. A practical complication is just being in the same room to ask questions, says Jim Zipursky, chairman and chief executive of Corporate Finance Associates, a Laguna Hills, Calif.-based investment-banking firm. “How you do physically do due diligence if you need to see a data center or can’t travel?” Zipursky said. 

Due diligence efforts also are affected because revenue and earnings will be altered by the Covid-19 response. Net recurring revenue and EBITDA, an acronym for earnings before interest, taxes, depreciation, and amortization, are vital to the payments industry, Zipursky said, suggesting 2020’s results should include EBITDAC, for Covid, to reflect the impact. The hospitality industry, in particular, may be deeply affected by the pandemic. These metrics, of course, have an impact on estimates of value, so some investment firms are taking a pause on valuations, Zipursky said.

How will M&A activity rebound following the Covid-19 scare? There will be significant haves and have-nots, said Cohen. Those organizations that adopted technology and found a way to survive will be among the haves. Those that did not, among the have-nots. The pandemic will also drive consolidation where there are too many players, he said. “M&A as a general rule will continue. This is a blip given where we are right now, so you’re going to have a glut of activity that has to happen over the next couple of years to make up for the quiet period for the next six to 12 months.”

It also may flip the market. Where the past five years have been an unprecedented sellers’ market, buyers may have the upper hand post-Covid, Zipursky said. “We do think the shoe will be on the other foot.”

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