We are proud to present our 2020 annual Newsletter on M&A deals.
2020 marks a new era for the M&A industry. Last year, we saw a peak in M&A deals due to the combination of companies buoyant share prices and the financing with relatively low-interest rates across major economies. This has changed. Not only has the world economy plunged into recession, but also the way in which deals take place has now transformed. Several deals have fallen apart and activity has slowed down.
Institutions have adopted “Work from home” policies that resulted in delayed and longer deal timelines, though this creates an opportunity for innovation in due diligence and regulatory processes. Meanwhile, central banks are injecting trillions of dollars into their economies, which may result in broader availability of credit, but possibly at the expense of strict borrowing conditions. Uncertainty remains.
Undoubtedly, some industries have been more affected than others. Once lockdowns are lifted, there may be an opportunity for the private equity sector to acquire at a discount businesses that have been hit most such as hotels, airlines, retailers, restaurants, etc. However, this remains contingent on companies’ ability to access financing.
Currently, companies are focused on protecting their balance sheet and have therefore postponed major corporate strategy decisions. We anticipate some big corporations in distress will deploy cash and resources to improve core operating activities, which can lead to a decrease in inorganic growth, yet an increase in divestitures and restructuring deals may keep investment banks occupied.
It is now up to us to embrace the change and adapt to this new world. We hope you enjoy reading this Newsletter and wish you all the best!
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