As a record number of firms trade hands, buyers are increasingly seeing companies on the block passing off Covid-related revenue surges as normalized earnings. Diligence efforts now revolve around understanding the reliability of earnings. “Some companies have seen a Covid bump, actually,” says Bain Capital Credit’s Michael Ewald, noting that targets are now saying “’Our last twelve months might be higher but for being shut down for a month.’ They’re arguing we’re going to stay high, so that’s what we’re keeping an eye out on.”
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