During economic crisis deploying capital for M&A is a risk or opportunity?

This topic contains 2 replies, has 3 voices, and was last updated by  Johanna Breinesberger 1 day, 10 hours ago.

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  • #110421

    Deepak kumar swain
    Participant

    COVID-19 crisis had an impact to world economy and its affected across the industries with an exception to few. with so much uncertainty, it might create a wave of consolidation. whether CEOs should look this as an opportunity or risk?

    #114313

    Karl Heinz Foertsch
    Participant

    If the acquiring company has a healthy balance sheet, a clear acquisition strategy and is patient to wait for the right opportunity economic downturns are a good opportunity to buy a competitor to consolidate the market or to buy complementary technologies or services. As long the acquirer know what it is doing risk should be minimal.

    #114350

    The Ccovid-19 pandemia provides two options for companies who have the resources to go on a shopping spree:
    1. There will be some great companies who do not have the cash resources anymore to keep up. They need at least an investor and/or strategic partner to survive the situation. Therefore, if the strategic fit is given and the cultural aspects are sound, I would advise to go for a deal, even if the financial aspects are not up to par.
    2. The pandemia has sped up the trends in some industries – especially eg. e-Commerce. Due to this companies have to move quickly to be able to meet these demands. As developing new solutions is a time intensive process, it is easier to acquire another company that already offers the service/product you need.

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