Covid-19 – impact, support and opportunities

The Covid-19 pandemic is a fast-developing situation and the range of outcomes is so wide as to make predictions at best meaningless, at worst misleading. What is clear is that it will be significant and felt by every sector of the economy for at least the rest of 2020, likely beyond.

This note summarises Armstrong’s view on the economic consequences, suggests how PE can support portfolio companies, highlights potential areas of concern, and suggests opportunities for new investment activity.

As ever, Armstrong is here to support you and your portfolios. The teams in London and Manchester have implemented our operational contingency plan and is working remotely with no business disruption. We will continue to keep our people safe and support our clients during these uncertain times.

The new reality This downturn shares characteristics with its predecessors, but in combination, it is unique. The simultaneous global supply and demand shock to the economy has triggered significant and rapid fiscal and monetary stimulus. China has demonstrated that full and fast implementation of social distancing and economic stimulus can suppress the spread and deliver a rapid economic rebound. Time will tell if the UK and other western countries can emulate this.

Businesses need to plan for the new ‘normal’ of extended social distancing and an eventual ‘U shaped’ recovery (i.e. fast-in, fast snap-back). Nobody ever regrets acting swiftly and decisively, or as Darwin surmised, those who survive “are not the strongest or the most intelligent, but the most adaptable to change.” If your portfolio business need this type of support, then the sooner the better.

Sector impact Considering Armstrong’s focus sectors through this lens suggests business models under pressure and those with opportunity, and sub-sectors that offer opportunity for new investment activity in the medium-term

Business Services

Pressured business models

Generalist recruitment and staffing.

Resilient business models

Essential business continuity, e.g. answering services.Infrastructure services, e.g. emergency services and healthcare support.

Security services.

Supply chain advisory.

Quick snap-back sectors

Procurement advisory.

Digital transformation.

Remote training & learning.

Financial Services

Pressured business models

Balance sheet intensive.

Discretionary investment.

Resilient business models


Head-count reduction.

Real-time processing.

Digital players.

Quick snap-back sectors

Risk management.

Process automation.

Wealth management technology.

Regulatory advisory & compliance.


Pressured business models

Hardware re-selling.

‘On-premise’ services / requiring on-site presence.

Discretionary spend, e.g. web refresh, bespoke dev.

Resilient business models

Enablers of distance working: cloud, connectivity, ITMS, UComms.

Mission-critical spend, e.g. CRM, ERP.

Quick snap-back sectors

Discretionary digital transformation projects, esp. cloud and SaaS adoption.


Pressured business models

Committed capacity.

Mainstream intercontinental.

Switchable destinations, e.g. Med beaches.

Resilient business models

Asset-light, scalable, e.g. third-party DMC.

Dynamic packaging.

Staycations & self-contained, e.g. camper vans.

Quick snap-back sectors

Domestic coach.

Self contained accommodation, e.g. lodge parks

Non-switchable destinations.

Autumn short breaks.

Short-haul ‘fly and flop’.

Online agents.

Built Environment

Pressured business models

High-end second homes.

Discretionary spend, e.g. conservatories.

Resilient business models

Affordable/Housing Association.

Critical spend, e.g. utilities, safety-related.

Quick snap-back sectors


Critical repairs & maintenance.


Pressured business models

Global supply-chain.

Consumer end-verticals.

End-to-end, sector concentrated OEMs.

Resilient business models

On-shore rapid supply.

Defensives, e.g. military, utilities.

Flexible, sector-diversified electronic manufacturing services (EMS).

Quick snap-back sectors

Critical repairs and maintenance.

Measurement and monitoring.


Pressured business models

Pure-play tradex with significant cross-border attendees.

Industry sectors focusing on at-risk populations.

Resilient business models

‘Events plus’, e.g. self-supporting networks, membership bodies, online communities, knowledge dispersion, data services.

Quick snap-back sectors

Membership/subscription models.

Data-rich content.

Industry sectors focusing on at-risk populations.

Event operations and security software.

Our senior team has experience of economic cycles and market shocks going back to the 1980s, with operational management experience, including restructuring.

In every crisis, there is opportunity. The Armstrong blend of quantitative and qualitative analysis is particularly well-suited to these uncertain times, providing forward clarity, practical recommendations and the confidence to implement them.

Please contact our relevant sector head to discuss the impact of Covid-19 on your new investment opportunities and the commercial implications for your portfolio companies. In the meantime, stay safe.

Kind regards

Tom, Simon, Mike, Peter, Matt and Richard.