A Bit of Perspective
By Ron Lentz
Whenever we are in times like this, I always reflect on how Warren Buffet keeps calm when the world goes crazy. It seems like a strange way to keep things in perspective, but he keeps newspaper clippings of all the economic crises from 1907 to today hanging on the walls of Berkshire Hathaway. In his own words, “it’s just a reminder that anything can happen in this world.”
The clouds over the economy are darker than they have been in a long time, but I think it is important we all share a bit of perspective. While this disease has taken a tragic toll on too many good people, I know from experience that there will be opportunity once everything clears up.
I have been reflecting on the explosion of money into private markets that happened after the 2008 crisis, and it seems that history is soon to repeat itself. If we look back at the data from that period for example, there was a 370% increase in m&a activity in the three month period from August to year’s end 2009. That trend will probably be even more extreme this time due to the unprecedented 1.4 trillion dollars in dry powder sitting in the accounts of Private Equity firms: money that must be invested somewhere.
The historical precedent seems to point to a surge in Private Investment from both strategic and financial buyers once the uncertainty in the markets subsides. As with anything, however, that surge in investment will only benefit the companies that are well prepared for it.
There is another quote from Charlie Munger, Warren Buffet’s business partner, that seems equally relevant as we look forward, “The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds.”
Our goal when starting Logisyn Advisors was to share our experience and knowledge with business owners building their own companies, and help them make good bets with great odds. We understand how important your company is to you, and we want to help you take full advantage of the best opportunities that present themselves.