COVID-19 Presents Challenges to Equitable Learning

A few weeks ago, we wrote about the critical role of education technology in the midst of the COVID-19 pandemic. With little-to-no time to prepare, schools across the country shuttered their doors and have attempted to shift classroom teaching to remote learning, without any precedent. Digital learning programs that have long been powerful tools for supplemental instruction are proving to be increasingly important in maintaining instruction during these extended school closures. That said, districts are confronted with different challenges in implanting distance learning which begs the question: Will the responses to COVID-19 end up privileging wealthier school districts thereby widening the gap for students in districts with limited access to technology and resources?

Education has evolved tremendously from the traditional methods of teaching from a decade ago. Namely, digital learning in the classroom is much more pervasive today and is used to deliver both supplemental and basal content. In districts where one-to-one learning has already been implemented, teachers and students are already accustomed to digital devices in the classroom. Thus, the transition and use of these devices and learning applications from home is not an entirely new concept. By lifting of take-home restrictions of devices, districts with one-to-one capability have been able to put devices in the hands of every student, allowing for continuity of learning for even the youngest learners. Though students are no longer sitting in a chair in a classroom led by a teacher, they are being instructed to interact and respond to digital content in a meaningful way. This engagement is absolutely happening in an online environment, which suggests that virtual learning in some districts is occurring successfully!

On the other hand, not all school districts have access to the best resources, whether fiscal, technological, or personnel in nature. Shifting education into the online realm from home has proven much more challenging for districts with partial availability of devices and internet connections at home. The timeline for instructional continuity for districts with fewer resources has proven to be longer. For districts serving a portion of the 30 million students who qualify for free or reduced lunch programs, remote learning has taken a back seat, at least initially. These districts spent the first weeks of closures prioritizing and streamlining distribution of food and meals to students. Upon ensuring students were being fed, these districts then turned attention to solving the problem of implementing learning from home. Yet, uphill challenges emerged in this area as well, forcing districts to get creative in bringing the classroom to the home. Approximately 5 million students lack internet access at home, due to low income or rural living situations. Education officials in South Carolina have resolved such issues by utilizing idle school buses, equipping them with wifi and parking them in specific neighborhoods to bring connectivity to these homes. However, connectivity is only useful if students have a device to go with it. In districts with fewer devices than enrollment, typically older students received priority in obtaining a loaner device. This leaves many households sharing a single device among siblings, which creates time constraints for each learner. As a last resort, a number of districts have gone “back to the basics” and send home paper packets and activities that do not require internet. That said, this approach is not particularly interactive, nor does it represent the gold standard of learning. Finally, there are teachers who are suddenly required to reimagine instruction and assignments in a digital and remote setting. Numerous challenges are presented including the varying levels of technological expertise by the individual teachers, as well as parents and students themselves. As each district does its very best to overcome the challenges presented by COVID-19, it’s apparent that there is no “one-size-fits-all” solution.

While it is too soon to determine whether COVID-19 will result in wider learning gaps for U.S. students, on the surface, we see that different districts have dealt with different priorities depending on their student demographic. No doubt, on the surface it appears that students with greater internet connectivity, familiarity with technology for learning purposes, and in-home availability of books and materials will have much higher probability of benefiting from remote learning during social distancing. These advantages are further pronounced by the fact that schools that have implemented digital learning in the classroom for many years prior to the pandemic have teachers that are inherently more prepared to teach remotely. One thing can be certain, the longer schools remained closed, the more likely equity in K-12 learning will deteriorate.

MHT Partners, a leading education investment bank, welcomes further discussion on the effects of COVID-19 on the education industry: Rebecca Bell (; Shawn D. Terry ( or Alex Hicks (

Made in the U.S.A: Will (Should) Global Supply Chains Survive the Pandemic?

The Federal Reserve’s Industrial Production and Capacity Utilization report for March, which was published on April 15, shows decreases in manufacturing output and industrial production of 6.3% and 5.4%, respectively(1). Declines that steep haven’t been felt on U.S. soil since 1946, when the country was demobilized in the wake of World War II. Manufacturing eventually rebounded significantly in the post-war era, as pro-labor legislation and limited global competition revitalized the automobile industry and paved the way for emerging sectors such as aviation and electronics. If past activity is any indication of future behavior, then the U.S. will innovate during this contraction to minimize the trough and then accelerate into recovery, but given the unprecedented nature of this crisis, can history repeat itself?

Over the past three decades, supply chains have become increasingly global – the passage of policies favoring free trade coupled with advances in logistics technology have resulted in a ‘shrunken world’: low-wage countries in regions that were once considered ‘distanced’ are now highly accessible. Further, in a capitalistic economic system where the health of a business is determined by its profitability, keeping costs low is key – in addition to labor, both land and raw materials can be significantly cheaper internationally. A single player that increases margins by outsourcing production is enough for the model to emerge as the benchmark for the industry – those that don’t adapt will be squeezed from the market and we (consumers) become reliant on goods delivered through complex supply chains.

A ‘black swan’ event, like COVID-19, is typically viewed as once-in-a-century occurrence, but the sheer magnitude of disruption caused by the pandemic should be the catalyst for a revamp of supply chains. The evolved sourcing methods that have generated a positive feedback loop between profit-maximizing producers and thrifty consumers have now been unmasked, and what we see isn’t pretty – intricate chains are inherently fragile when dependent on multiple tiers (“links”) of suppliers, alarming concentration driven by the bottom-line mentality that prioritizes price above diversity, and severe inventory shortages that were once touted as a cost advantage resulting from lean operations. Those three realities, which were previously considered to be minimal threats, have increased risk exposure to a degree that’s unquantifiable.

Remedies for these issues will unquestionably take both time and resources to implement, but the framework can be engineered now with a basis centered on shortened supply chains by way of a shift to onshore manufacturing. An upheaval of existing processes will surely come at a cost for any business, but potential losses can be mitigated. Recent advances made in automation, namely artificial intelligence (“AI”) and machine learning, have given birth to promising processes like 3D printing and other robotic-based production that offer optimization while minimizing the need for human capital, which has dissipated (for good reason) amid the social-distancing orders required to navigate a pandemic. By bolstering existing policy that encourages businesses to invest in these cutting-edge solutions, Uncle Sam can help facilitate the technological transformation, which will actually reduce costs long term through economies of scale.

While not domestic but technically onshore, Mexico represents another alternative for reconfiguring lengthy, multiple-link logistic chains – the country saw low-cost labor hover around $5 per day in 2019(2), while China’s minimum daily wage ballooned to almost $17 by the end of the year(3). Establishing supply bases in the western hemisphere would help shorten and diversify chains to reduce the risk carried in global networks that are prone to collapsing at any node.

Undoubtedly there are limitations to the changes proposed above – for example, complete vertical integration is not feasible for a U.S. manufacturer of bicycles that needs scandium, an element that’s only known to exist in Scandinavia and Madagascar, for frames. So, while it may not be possible to source all raw material in North America, larger inventories could be stored on the continent as an emergency supply. The storage of materials that are required for the production of essential goods is crucial in ensuring that a country has a sufficient supply of healthcare equipment for citizens amid inevitable future pandemics.

U.S. companies would be wise to learn from this ongoing tragedy by embracing advances in production technology and diversifying supply networks to strengthen themselves in preparation for the next event, whether it is another pandemic, a war, cataclysmic climate change, a large-scale cyber attack, or a natural or man-made disaster.

(1) United States Federal Reserve System
(2) Thomson Reuters
(3) Trading Economics
The Wall Street Journal

Food & Beverage Opportunities in the Midst of COVID-19

COVID-19 has certainly created challenges and pain in a host of industries.  That said, adversity often breeds opportunity, and it is no different for the consumer packaged goods (“CPG”) industry. With respect to the food & beverage side of things, below are a few observations:

  • With respect to food & beverage, the direct-to-consumer (“DTC”) model, while benefiting in an outsized manner presently due to “pantry stuffing,” will nonetheless capture gains due to permanent shifts in consumer behavior, increasing their share of consumers’ buying trends and wallets.
  • U.S. consumers spend approximately 10% of their disposable personal incomes on food; split roughly 50/50 between at home and away from home, with the scales tipping slightly towards eating out. From a dollar perspective, U.S. consumers spent approximately $1.6 trillion on food & beverage in 2019. As of this moment, most of that approximate $900 billion of “eating out” spend is “up for bid.”
  • Given the dislocation in the market, an opportunity for a brand discovery presently exists as consumers rethink family food budgets, what they are eating, and the nutritional choices they are making. In particular, DTC models, already on the rise, have an opportunity to further accelerate their traction. Food & beverage eCommerce sales, while a small ~2% of total food & beverage sales, were already growing approximately 20% annually prior to COVID-19.  While only one data point, Unilever reported DTC sales of its products (approximately 6.5% of its total sales) grew 36% in the quarter. Shelf-stable products (particularly those in non-glass lightweight packaging) stand to benefit most, as they are conducive to efficient, cost-effective pick-and-pack shipping.
  • One would expect to see eCommerce penetration increase across all cohorts (Gen Z, Millennials, Gen X and Baby Boomers) but in particular, on a relative basis with Boomers, and to a lesser extent Gen Xers, given the unique COVID-19 age risks at hand.
  • Male purchases, which lag female purchases, may see an upsurge related to an apparent higher COVID-19 infection risk within males.
  • Premium food & beverage products have held up decently thus far and are likely to continue to do so, though the longer a return to “normalcy” takes, the more “in focus” these products will be in the cost-benefit analysis of consumers. Continuous adherence to a rational and attractive price value proposition will be key for these companies as they reflect upon their distribution channels, price points and content.

To date, we have seen numerous examples of consumers investing in themselves during this period of social distancing . . . exercise equipment, outdoor products that can be used in a solitary context, supplements, and food (for themselves or their pets) – and let’s not forget alcohol (for mental well-being!).

MHT Partners, a leading consumer investment bank, is very active in the food & beverage space and will keep its finger on the pulse during this global pandemic. If you would like to learn more about MHT’s consumer advisory practice, please e-mail Craig Lawson,; Patrick Crocker,; Gavin Daniels,; Tara Smith, or Tom Gotsch,

COVID-19 & IT Services: Cyber Security & Cloud Expertise are Paramount

The COVID-19 pandemic is causing a huge spike in the number of at-home workers. Estimates show that two thirds of the U.S. workforce now work remotely, and this number is expected to remain steady through April and potentially May.(1) In turn, this has put extreme pressure on internet bandwidth. During the month of March, global internet traffic increased by 30% while normalized monthly growth was expected to be about 3%.(2) Yet companies are being forced to slash IT spending because of the growing economic uncertainties as a result of the pandemic. The combination of a larger remote workforce, increased internet traffic, and shrinking IT budgets has presented cyber criminals with an ideal environment for wreaking havoc.

Cyber attacks have exponentially increased since the onset of the pandemic, largely due to the transition to a distributed workforce. As employees bring corporate devices onto unsecured networks and unsecured devices onto corporate networks, they provide cyber criminals with a variety of potential entry points into a company’s network infrastructure, such as remote desktop protocols (“RDPs”). A recent analysis by Reposify indicates an increase of 127% in exposed RDPs since the start of the pandemic.(3) Targeted attacks have appeared in many forms. As of March 26, the number of coronavirus–related phishing attacks rose 667% compared to the prior month.(4) Cyber criminals attempt to gain access to employee credentials or other sensitive information through clickbait that tempts the employee to follow a link for more information. Another commonly used method for cyber-attacks has been the creation of fake COVID-19 informational websites. Over 100,000 domains have been created since the start of the crisis, many of which are aimed at preying on people who desire real-time updates on the pandemic.(5)

Despite a short-term IT spending spree required to enable working remotely and defend against cyber attacks, companies are expected to pull back on overall IT spending as a cost-cutting measure to combat the economic slowdown resulting from the pandemic. Forrester has revised its forecast of 2020 IT spending to be down nearly 10% between March and April alone.(6) While providers of IT products will be hit hardest, IT managed service providers (“MSPs”) that are particularly well equipped to enable remote workforces and provide cyber-security solutions are expected to fare better than other industry participants during the downturn. The necessity of increased investments and the need for third-party assistance to build and secure remote work capabilities were quickly realized once the nation was ordered to work from home. In a recent survey of channel companies conducted by CompTIA, approximately 75% of the firms reported an increase in business opportunities since the onset of the pandemic, primarily due to the shift from on-premise infrastructure to cloud-based infrastructure and the need for enhanced cyber-security solutions.(7)

Moving forward, although overall IT spending will be down for a period of time, MHT Partners expects pure-play MSPs and IT services companies with significant revenue derived from cloud and security expertise will continue to be sought-after acquisition targets, as these firms will fare better in the downturn and be in the best position for accelerated growth as the economy recovers.

MHT Partners, a leading technology investment bank, welcomes the opportunity to discuss how the IT services market will continue to evolve in a post-pandemic world. Please contact Kevin Jolley ( or Mike McGill ( to start a conversation.


Play to Connect: Gaming is Engendering Social Connection in the Age of ‘Shelter in Place’

By all accounts, the U.S. gaming industry is booming due to shelter-in-place ordinances systematized throughout the country. From video game consoles, like Microsoft’s Xbox or Sony’s PlayStation, to mobile apps and board games, consumers are turning to gaming not only to escape the onslaught of COVID-19 headlines, but also to connect with friends and family safely and responsibly.

Video game consoles have reported large spikes in usage. Sony recently reported throttling game download speeds for its PlayStation platform in order to “ensure internet stability.” Microsoft’s Head of Xbox, Phil Spencer, commented on Twitter that “usage is up on almost everything,” referring to the many online titles offered on the platform. Steam, an independent digital distribution service that allows consumers to purchase games directly from developers, reported the highest average concurrent users ever on the platform last month, an increase of 20% over the same period last year. The popularity of traditional console games combined with the desire for players to interact has put a strain on supplemental communication services, like Xbox Live and Nintendo Online. These services, which allow gamers to chat, joke, and coordinate strategies live while engaged in multiplayer games, have reported multiple short-term outages over the past month due to the burden of increasing demand. While the ability for gamers to ‘meet up’ online is not new, the widespread shelter-in-place mandates make these services a unique draw for many who are looking to connect with peers. As such, the world of online gaming is seeing many new faces, as well as some familiar faces, more often.

On the mobile app front, the usage of gaming apps on phones and tablets is up 75% according to March 2020 data published by Verizon, with 23% of those users playing newly downloaded games(1). The increase in usage is double that of social media, web, or video streaming apps like Netflix, Amazon, and Hulu, over the same period. According to the data, card, word, and board game categories saw the largest increase among new game downloads, respectively. The increase in card and board game app downloads may correspond with a similar uptick in the use of virtual services, such as Zoom, Skype, or FaceTime, where friends and family can converse in real-time while also playing the same virtual board game. Or, as I can attest, weekly poker nights using Zoom to add some jokes and banter to our app-based group poker game.

Demand for traditional board games has also increased. Ravensburger CEO, Filip Francke, reported last week that puzzle and board game revenue is up 10x over March 2019 – numbers typically seen only at the height of the holiday shopping season(2). One reason for this may be as families and parents seek wholesome entertainment for their kids, board games have become a great, non-screen-based option. Another indicator of the popularity of board games can be found at Hasbro, whose stock has strongly outperformed the broader S&P 500 over the past month due to increased demand for the Company’s traditional board games such as Monopoly, Operation, Jenga, Life, and Risk. Capitalizing on their products’ increasing popularity, last week Hasbro launched the ‘Bring Home the Fun’ program, offering parents and caregivers resources to keep kids engaged and challenged and offering tips to ensure families stay connected during these difficult times.

Natural disasters and economic crises tend to accelerate underlying trends, business models, and business practices that were sustained by a strong economy. Gaming has been growing its share of consumer time and entertainment spend for years. As we find ourselves in the throes of maintaining social interaction during the age of COVID-19, gaming has developed from being a convenient form of escapism, to a useful tool for nurturing our social relationships. As we look ahead towards eventually exiting this crisis, it will be interesting to see if the accelerating trends in gaming and social connection maintain their trajectory going forward.

As consumer investment bankers, we are keenly following the evolution of online and in-person gaming in the age of COVID-19. For further discussion around the trajectory of consumer M&A and the current market environment, please feel free to reach out (Craig Lawson,, Patrick Crocker,, Gavin Daniels,, Tara Smith,, or Tom Gotsch,


Emergency Medical Services During COVID-19: Observations and Opportunities

In recent weeks, emergency medical services (“EMS”) and ground medical transportation operators have been on the front lines in the battle against COVID-19. Predictably, given the massive disruption that the virus has imposed on the healthcare system, the medical transportation industry has been upended. Understanding the challenges that medical transport companies are experiencing, planning how to navigate and emerge successfully, and looking ahead to areas of opportunity within the industry will position leading companies to succeed going forward.

In recent days, MHT Partners has had conversations with a number of EMS companies and investors in our network, representing large multistate ambulance companies, regional and local operators, vendors, and private equity groups. In all of our discussions, a handful of key observations have emerged as we look to weather COVID-19 and assess its impact on the industry:

  1. First, the COVID-19 pandemic has significantly impacted medical transportation companies’ performance. Ambulance operators in every jurisdiction have noted that volumes for all classes of service are down approximately 25%. For emergency transports, fewer road miles, widespread workplace closures, and lower hospital utilization rates for non-COVID-19 conditions are depressing volumes. Individuals are largely avoiding hospital environments if they can help it, viewing them as potential COVID-19 hotbeds. Inter-facility and non-emergency transports are down as well, due to isolation protocols within many skilled nursing and assisted living facilities as well as widespread postponements or cancellations of elective procedures.
  2. From a labor supply perspective, paramedics and EMTs on the front lines have been exposed to COVID-19 at greater rates than the general population. And in areas such as New York, the ranks of first responders have been thinned due to confirmed cases or self-imposed quarantines. Even in less-populated areas with lower infection rates, where medics and EMTs may perform work for multiple municipalities or private agencies, efforts to limit the mixing of employee pools have made staffing more difficult.
  3. On the bright side, government and commercial payors have continued to function as usual, maintaining their reimbursement commitments to ambulance operators.
  4. EMS agencies have also performed better on a relative basis than many other segments of the economy, as they have been deemed essential services.
  5. Lastly, ambulance companies have access to emergency funds provided by the federal government just like other businesses.

For these reasons, all signs point to medical transportation companies emerging from the coronavirus pandemic in a position of strength.

In fact, many industry participants are tracking ways in which COVID-19 may accelerate the adoption of emerging operating models and technology within medical transportation. Most notably, though The U.S. Department of Health and Human Services (“HHS”) has delayed the pilot of its Emergency Triage, Treat, and Transport Model (“ET3”), The Centers for Medicare & Medicaid Services (“CMS”) has temporarily allowed the flexibility to transport Medicare beneficiaries to alternative locations for the duration of the COVID-19 emergency. Operators are also watching for relaxed treatment-in-place (so-called “treat-and-release”) and telehealth protocols. Investors with a close eye on emerging trends within EMS include Frist Cressey Ventures, which last week announced a partnership with Ready Responders, a technology-enabled provider of in-home urgent care working with EMTs and paramedics.

MHT Partners, a leading healthcare services investment bank, is very active in the medical transportation industry and will keep its finger on the pulse during this global pandemic. If you would like to learn more about MHT’s healthcare services advisory practice, please e-mail Alex Sauter ( or Taylor Curtis (

What Will “Back to Normal” Look Like for Physicians Once COVID-19 is Contained?

As COVID-19 continues to spread across the United States, the nation’s healthcare professionals work tirelessly to treat patients, reduce the spread, and keep the healthcare system running. With social distancing in effect and more physicians working directly to slow and treat COVID-19, most routine physician appointments have been delayed or cancelled. It’s hard to say when physicians will return to normal schedules and corresponding patient volumes, however, it is clear there is significant pent-up demand for non-emergency doctor visits.  This blog examines how several sub-specialties in healthcare could rebound as social distancing efforts are lifted.

U.S.-based orthopedic surgeons perform 1.77 million knee arthroscopies, 200,000 rotator cuff repairs, and 100,000 ACL reconstructions each year1. ENTs successfully complete 500,000 tonsillectomies and 250,000 sinus surgeries annually2. These surgical interventions represent only a fraction of procedures that are vitally important to the well-being of millions of patients but have also been delayed to ensure hospitals retain capacity and to reduce the spread of COVID-19 to patients. With likely 10-15% of annual procedures now delayed or cancelled, physicians across the diverse array of surgical specialties, nurses and techs in those fields, and operating rooms will be in high demand when COVID-19 cases begin to decrease.

Regular check-ups and screenings have also been put on hold for several weeks and potentially longer. Many primary care groups and even select specialist groups, in areas like dermatology, are rolling out telehealth support for patients, allowing for continued appointments, chronic disease management, and prescriptions for acute, non-COVID-related conditions. However, without regular, in-person primary care, some health problems may go undetected in some already at-risk patient populations. For example, type-2 diabetes and high blood pressure are common health issues caught by primary care physicians in a physical setting3 that may be underdiagnosed in the coming weeks. Specialists that rely on referrals will also see lower appointment traffic. Moreover, many regularly scheduled screenings have been deferred or cancelled. For example, there are 17.3 million mammograms3 and 19 million colonoscopies3 in the U.S. annually to screen for breast and colorectal cancers, respectively, most of which will not happen in the coming weeks. Without screenings and routine check-ups, it is reasonable to expect lower numbers of diagnoses of common diseases, including cancers, in the coming weeks. But, when healthcare operations return to closer-to-normal numbers, diagnoses will likely catch-up quickly to track with expected annual totals, followed closely by those patients beginning appropriate treatments.

Meeting the growing backlog of healthcare demand comes with several challenges:

  1. First and foremost, keeping healthcare providers safe and healthy during the treatment of COVID-19 is necessary for meeting any demand for future healthcare. Appropriate personal protective equipment and precautions for providers will help fight this pandemic and preserve their ability to fight future health challenges.
  2. Additionally, with appointments for screenings, check-ups, and procedures plunging in recent weeks, many private physician practices have turned to furloughing or even laying off personnel that are not involved in activities essential to tackling COVID-19. Physician groups will need to ramp their head counts back up to schedule and treat patients once the epidemic passes.
  3. Lastly, appointments will not strongly rebound without health insurance certainty, which is threatened by the recent mass layoffs.

COVID-19 has challenged the healthcare system in an unprecedented manner and will continue to do so as we approach the peak. Once beyond the momentous task at hand, though, physicians, healthcare systems, and stakeholders will need to begin thinking about how to address a large demand for more traditional healthcare services for patients who will be anxious to see their physician again for surgical procedures, screening exams, and even their routine annual visit.

MHT Partners, a leading healthcare services investment bank, welcomes further discussion about the effects of COVID-19 on the healthcare industry: Taylor Curtis ( or Alex Sauter (

(1) U.S. Market Report Suite for Orthopedic Soft Tissue Repair and Sports Medicine
(2) American Academy of Otolaryngology-Head and Neck Surgery
(3) Center for Disease Control

Recessionary Impact on Education: 2008 Versus 2020

In the past two months, the U.S. saw a sharp 35% decline in the equity markets driven by the COVID-19 pandemic as well as global oil market turmoil. By comparison, the 2008 Great Recession saw a nearly 50% drop in the markets due to the collapse of the housing market. Despite having very different catalysts, both recessions resulted in sweeping impacts to most sectors of the broader economy. Let’s look at how 2008 impacted the education sector and whether we should anticipate similar effects in 2020.

Following the Great Recession in 2008, the 2009/2010 school years marked the first time in 50 years when education spending contracted nationwide. K-12 spending declined from $610 billion to $601 billion from 2010 to 2012* and did not exceed 2009 levels again for five years. The greatest impact on schools and students occurred from 2010 to 2012, representing a noticeable delay from the effects felt by the general economy. How so? A couple of variables were at play.

  • First, federal stimulus funds provided nearly $100 billion to the Department of Education with the purpose of delivering emergency funds to states. Nearly two-thirds of that money was awarded by late 2009, which then buffered education budgets through 2010. However, the expiration and roll-off of these funds in 2011 and 2012 were then felt throughout the U.S. education system.
  • Tax revenues directed toward education by state and local governments also influenced the delayed effect on education. State tax structures vary widely, driven primarily by sales and income taxes, while local budgets are supported primarily by property taxes. Assessed property values often lag market values, which helps to support property tax revenues in a recession, at least initially. However, in a multi-year recession, property values and corresponding tax revenues will eventually decline. This funding dynamic upheld education funding at the local level during the worst years of the Great Recession. Consequently, the education market was subsequently impacted in an “echo fashion” and to a lesser degree than the broader market from 2010 to 2012. School budgets tightened due to the ongoing decline of local tax receipts and without additional federal aid.

So, will the COVID-19-induced recession in 2020 have the same effects on education as those seen in 2008 through 2012? First and foremost, it is generally understood that faster falls of the economic markets lead to shorter recoveries. So far, the 2020 bear market is less extreme in percentages, but the month-long window of declines is also much shorter in comparison to the slow and steady 16-month decline from mid-2007 to early 2009. While no one can predict with certainty if the bottom has already been reached, the steep drop in the markets thus far are much more sudden than in the prior Great Recession. While sales and income tax revenues will certainly be impacted by the COVID-19 pandemic, assessed home values and associated property tax revenues are less likely to be affected if the recovery occurs within one year, which suggests education funding will also be less impacted.

Furthermore, the 2020 CARES Act earmarked over $43 billion in stimulus funding for education, with approximately $14 billion dedicated to K-12. This figure represents a fraction of the $100 billion in education funding from the American Recovery and Reinvestment Act of 2009 (“ARRA”). When we refer back to the time span of the Great Recession, a majority of ARRA education funding was intended to shore up state funding for public schools. It was a tremendous cost to restore the total level of public education funding for 2010, 2011 and 2012 to that of 2008 and 2009 levels. Education experts question whether $14 billion in federal stimulus is enough for sustained support of weeks, or potentially months, of school closures. That said, there may be potential for additional funding for education in future phases of the stimulus package if they occur.

As the saying goes, ‘only time will tell.’ If this recession lasts only a matter of months, public education spending may not see any decline at all. The question is less about whether public education funding will survive this economic downturn, but how far the government will have to step up to maintain status quo for students across the U.S.

Source: NCES, Department of Education

From Clerk to Courier: How COVID-19 is Accelerating the Transformation of Employment in the U.S.

Among the bevy of disheartening headlines that have cascaded from media outlets since COVID-19 reached U.S. shores in late February, one developing story has been especially tough to stomach – over the three-week period spanning March 15 and April 4, 16.5 million American workers filed for unemployment.

To make that statistic easier to conceptualize, consider the start of a week in New York City, which has a population of 8.7 million – imagine if by dusk on Friday morning, the entire city had been laid off.  Calling that scenario ‘catastrophic’ wouldn’t be off base, but that’s before learning that just a week later, the 7.8 million who reside in the San Francisco Bay Area had also been dismissed from work.

While less geographically concentrated, the magnitude of the reality that our country faces far exceeds what was hypothesized above.  Economists at the Federal Reserve Bank of St. Louis have projected the loss of jobs for 47 million in downside cases stemming from disruption caused by the pandemic, which translates to an unemployment rate of 32.1%.  With Congress negotiating a fourth relief bill on the heels of the $2 trillion dollar stimulus package that President Trump signed into law on March 27, the Federal Government is taking unprecedented measures to curb an unemployment rate that has climbed at a record-breaking pace.

It will likely take weeks (if not months) to quantify the impact of this stimulus, but despite all of the uncertainty, there are a handful of companies actively hiring to meet the demand of consumers who (unsurprisingly) still need staple goods amid the nationwide lockdown.  Amazon (NASDAQ:AMZN), which raised minimum pay to $17/hour, has already hired 80,000 with plans to employ an additional 20,000 to keep up with order fulfillment.  Instacart announced a need for 300,000 workers, more than doubling the size of its current workforce of 200,000, to meet the surging demand for grocery deliveries.  Even retail giant Walmart (NYSE:WMT), which employs 1.5 million, aims to add 150,000 workers for assistance in its e-commerce warehouses.

To say that there is a labor market despite the onslaught of unemployment may sound tone-deaf, but it would not be false.  While the pandemic has exacerbated the demise of brick and mortar retail as evidenced by the recent closures of Macy’s (NYSE:M), JC Penney (NYSE:JCP) and Kohl’s (NYSE:KSS), it has accelerated the transformation of employment in the U.S., a shift that began decades ago albeit in a far less abrupt manner.  Over the five years preceding 2020, employment in the U.S. e-commerce industry increased at an annualized rate of 10.3% while retail headcounts declined 9.6% over that same time period.  Prior to COVID-19, employment forecasts supported the continuation of this trend with e-commerce estimated to grow at an annualized rate of 6.4% versus a modest 1.3% expected rise for retail over the next five years through 2024, but as the pandemic-induced upheaval persists, the difference between both projections will almost certainly increase.

Store clerks and floor staff, many of whom boast 20+ year tenures with their employers, have become collateral damage in the sudden expiration of the retail industry and will be forced to pivot careers during a precarious time.  Delivery couriers, truck drivers and others positioned on the frontlines of the pandemic have expressed serious concern for personal safety while handling hundreds of packages, doors, gates, etc. with inadequate sanitation supplies and no health insurance.  These workers have found themselves between a rock and a hard place where the effort to make ends meet could jeopardize their own well-being.

As investment bankers with a focus on both technology and consumer businesses, we are continuing to track the shift in employment from traditional ‘brick and mortar’ retail to web-based e-commerce and how that movement may alleviate unemployment figures in the coming months.

Sources: United States Census Bureau, The Wall Street Journal, IBISWorld

How Does COVID-19 and a Remote Workforce Impact the Future of Employee Engagement?

Many people claimed that 2020 would be the year of the distributed workforce. In the wake of unprecedented events in modern history, even the most optimistic believers could not have anticipated that the majority of the country would be currently working remotely. With COVID-19 rapidly spreading across the nation, leaders in the public and private sectors have been left with no choice but to require employees work from home. Prior to the crisis, a mere 3.6% of the U.S. workforce worked at home half or more of the time. Preliminary estimates show that as a result of COVID-19, anywhere from 25-30% of the U.S. workforce will continue to work remotely at least half of the time(1). What was once purely a social experiment, a distributed workforce may now be the reality for a number of Americans.

A typical employer can save approximately $11,000 per year for each person that works remotely half of the time(1). Thanks to workflow and communication tools offered by providers such as Microsoft(2) and Zoom(3), employers have quickly harnessed the power of technology in the transition to and adoption of a remote work environment for enhanced productivity. As the distributed workforce becomes more broadly utilized, the nation’s employers, particularly small- and medium-sized businesses (“SMBs”), will also need to maintain strong employee engagement and recognition programs to continue fueling productivity. For this reason, MHT believes that employee engagement and recognition providers will see increasing demand for the design, implementation, and management of tech-enabled solutions that ensure employees remain connected to both the social and productivity aspects of working in a remote environment.

Research has shown that companies that successfully engage employees achieve earnings-per-share growth that is more than 4x their peers(4). The social aspect and comradery of the workplace is important to employees and is one of the main drivers of producing meaningful work. However, establishing engagement and recognition programs for a distributed workforce presents materially different challenges than an in-person program. Managers might not know how to organize and lead a remote workforce, employees may be less recognized for work done remotely, and it may be more difficult to accurately assess the productivity and overall sentiment of a distributed workforce.

Similar to outsourcing workflow and communication needs, SMBs can outsource all engagement and recognition needs to tech-enabled providers instead of spending unnecessary time and money on developing a program internally. Providers such as ITA Group(5) and Workstride(6) offer a suite of cloud-based software solutions, including the design and implementation of a virtual community through social communication channels directed at engaging employees in a non-work environment. Additionally, the providers offer a platform for peer-to-peer employee recognition and a website to redeem rewards from the recognition earned. Even more compelling, the providers offer analytical platforms and reporting dashboards that track workforce mood and engagement through pulse surveys, crowdsourced data, and company assessments. Taken together, employee engagement and recognition providers offer a unified, holistic set of solutions to managing engagement and recognition for a remote workforce.

MHT welcomes the opportunity to discuss how the influx of demand for distributed workforce solutions will continue to draw investment interest from strategic and financial parties for employee engagement and recognition providers. Please contact Mike McGill ( or Kevin Jolley ( for more information.

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