Editor’s Note: In Mergers & Acquisitions’ October cover story, we explore the recent rebound in M&A through the eyes of several prominent lenders. See Lenders are Ready, Willing and Able to Help Private Equity Rebound for more. Here, we asked Churchill’s Randy Schwimmer, who is the founder and publisher of the The Lead Left, to share his perspective on dealmaking in the near-term future.

As goes Covid-19, so goes the nation. Back in April we rephrased the 1950’s dictum on General Motors’ in describing how the coronavirus hijacked the economy and our lives. This proved out in countless ways.

Much ink has been spilled analyzing the pandemic’s impact on the capital markets, M&A, and private capital. How shut-downs, and subsequent open-ups, are affecting pricing, valuations, financing terms, and overall deal activity, and what the prospects are for the balance of 2020.

But less attention has been paid to 2021. We think that’s because the two biggest questions driving GDP and markets – timing of a vaccine and identity of the next administration – won’t be answered for several months. Nevertheless, let’s look at trends closer to home; namely, the velocity and characteristics of middle market deal flow.

Financing Terms. Let’s start with good news: Liquidity is available for the right borrowers. Lenders aren’t adventurous with hold levels, nor will they underwrite without a sponsor-backed club reducing that risk. But pricing has eased (and leverage up) from terms in April. Good news for investors too: Bull market features, such as middle market covenant-lite and full dividend recaps, are scarce.

Valuations. Today Covid-impacted businesses (have-nots) aren’t readily sellable, while those less hampered or improved by the crisis (haves) are going for pre-Covid (or higher!) Ebitda multiples. That trend should continue well into 2021.

Valuations move as PE dry powder and corporate cash are deployed. Those dollars remain at record levels: $1.5 trillion held by sponsors globally, and $1.5 trillion with the S&P 500. With yields at all-time lows, the urge to invest is hard to resist.

M&A Volume. Buyers may be flush with cash, but will sellers sell? Depends whether they think a better price comes by waiting. For have-nots, later is better, unless the business is headed for bankruptcy. For haves, next year’s numbers may improve, but the election adds uncertainty. One analyst suggests sellers could incur a three-times Ebitda penalty for potential higher capital gain taxes next year.

M&A Processes. Transaction efficiency is key to getting deals done. How much easier will 2021 due diligence be compared to hurdles now? Future travel and meeting logistics depend on the virus’ course. Conflicting state quarantines present real challenges. When vaccines are readily available, personal meetings may take back Zoom share. Expect processes to improve – better than this year, but not 2019.

Industry Winners and Losers. Until infection rates bottom out, the consumer front lines of retail, restaurants, and travel/leisure will struggle mightily. Cyclicals such as auto, chemicals, and energy will underperform. As was the case pre-Covid, software, tech, and B2B will outperform. Healthcare will do well, though patient-facing companies, such as physician practice management, will be slower to recover.

The pandemic’s progress has not been a straight line. Hard to imagine there won’t be surprises down the road. Will international restrictions lift because the U.S. has a couple good quarters? Will business travel snap back when vaccines emerge? Will restaurants, bars and gyms fill up? Will work-from-home, masks, and sanitizers fade away?

As Covid-19 goes wherever it’s going in 2021, asking when things will return to normal probably isn’t the question. As one study recently noted, “normal isn’t available to us anymore.”