May 6, 2020 at 9:30 pm #109903
How will Corona affect M&A activities because unlike other past crises this one is based on both, a demand and supply shock? Will the number of transaction globally plunge e.g. after 2000 or decrease only slightly e.g. after 2007? I’m curious to hear your opinion!May 10, 2020 at 9:22 am #109972
I believe the number of transactions globally will definitely decrease, but I believe there will be some activity. There are still companies with great balance sheets and strong infrastructures/supply chains that can take advantage (I was on the sell side to a Fortune 50 in 2008). The Fortune 50 company gave out their first dividend ever during our Due Diligence process early 2009 and had leverage to really drive down purchase price in rough times.May 26, 2020 at 7:34 pm #110389
Interesting topic Tobias, I’d like to hearing everyone’s opinion in this, and what they are seeing.
Personally, and just from my experience, I am seeing an increase in small-mid market owners inquiring of selling their business, or looking to partner with investors, and private equity firms are taking notice. As such, I believe small-mid market fragmented industries are ripe for roll-up acquisitions, and therefor will experience increased activity.
I feel the pandemic can be treated from other past crisis, such as the 2008 global recession, reason being, is that corporations may begin to work differently, and so from a more macro/global position, I believe we will also invariably see an increase in M&A.
This will be encouraged for the following reasons:
a. interest rates will encourage investment
b. overcapacity may be recognized in industries; and most importantly
c. acquirers will begin to identify non-essential costs in targets in what might be a new working normality and seek to capitalize on de-layering and reducing overheads to increase value and profitabilityJune 2, 2020 at 6:22 pm #110529
I believe that the Coronavirus will create needs in some spaces that otherwise would not be needed. I think pandemic will cause some to become aggressive in finding deals and opportunities, and then conversely cause some to retreat when it comes to deal finding. If you look at the financial crisis of 2008, many firms saw financial prosperity by taking chances and hedging that the markets would have a positive turn. I think a similar opportunity is available here as well.June 6, 2020 at 6:59 am #110605
I personally see an increment in M&A activities, due to the devaluation of struggling companies, where cash rich companies taking the advantage of COVID-19 situation. Second supporting element supporting Cash rich/ non-struggling companies is the lower interest rates.June 7, 2020 at 3:36 am #110617
The M&A activities should increase for small businesses and a lot of market consolidation should be seen. Given the sensitive economy, major deals (if any) should see more DOJ action than usual.June 15, 2020 at 4:09 am #111706
Billy Fok Kam LuenParticipant
I personally feel that the m&A activity is heavily increased during this period because now is the time to buy the company at a low cost, because some company is facing financially issueJune 19, 2020 at 1:13 am #111765
I agree with Billy Fok Kam, M&A opportunities will increase as a result of corona virus due to many companies being weakened and thus becoming affordable acquisition targets.
You must be logged in to reply to this topic.