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April 24, 2020
“It was the best of times, it was the worst of times …” Charles Dickens, A Tale of Two Cities
It’s a literary device called “Juxtaposition”: the placement of two ideas next to each other for the purposes of comparison and contrast. And Charles Dickens was a master. In this case, it starts a story set in a time of great crisis – the French Revolution – and highlights the effect of that crisis on the lives of royalty and commoners, Parisians and Londoners; lovers, and enemies. It’s not unlike the pandemic.
I’ve seen a lot of information on how to deal with the impact of the novel coronavirus and COVID-19, the disease it causes. Indeed, BoyarMiller has produced a ton of content relating to how the pandemic will affect you and your business and the various programs that have been implemented to deal with the economic impact of social distancing mandates. You can review HERE.
I want to think about the opportunities this presents:
1. Businesses will fail (just not yours). Like humans, the businesses that are most at risk are the old (e.g., obsolete products or services, outdated methods, etc.) and those with co-morbidities (e.g., undercapitalization, over-leverage, toxic cultures, etc.). Some will be on life support for a while and may actually survive but many will not. In either case, they will leave underserved markets. It’s an opportunity to expand.
2. Be opportunistic. If you know me, you know I like old cars. I learned a long time ago not to buy a damaged car from a healthy seller – he knows what’s wrong and how much it will take to fix it. Look for clean cars from damaged sellers. The best purchase I ever made was an absolutely pristine 1969 TriumphTR6. I bought it from a guy that had too many cars and a new baby (I know, not really damaged but you get the picture). The worst was a 1965 Lotus Elan. It needed a lot of work but was cheap and I admired the car. I paid a fair price for the Triumph, drove it for two years, never put a dime into repairs, and sold it for a profit. The Lotus has been a money pit and still isn’t drivable. There are good people, good assets, and good businesses available for employment or acquisition. Go find them.
3. A Better Life Awaits. I think of the pandemic like a forest fire. It’s devastating to the standing timber. But beneficial – in fact necessary – for new growth. NOV, the dominant supplier of oil and gas equipment, was borne with the merger of Aramco’s National Supply Company and US Steel’s USS Oilwell following the 1980 oil crisis. That crisis also allowed new drilling and production technologies to gain a foothold and drive recovery and the oil boom that followed. There will be a recovery. Bold actions and new ideas will move to the front of the line.
So, we have the juxtaposition of the worst economic crisis in modern memory and the opportunity it creates. I prefer Sydney Carton’s vision facing the guillotine: “I see a beautiful city and a brilliant people rising from the abyss …” What do you see?
In the shameless plug department, you might get some ideas by reviewing our online Conversation About Capital Markets – What’s Ahead. We’re here to help …