Global M&A Industry Trends

M&A trends are showing signs of a rebound; expect a jump in deals by year-end

Has Covid-19 changed the M&A game? Yes and no. On the one hand the crisis has created huge uncertainty and forced many players to put their plans on hold. On the other hand there are still compelling fundamentals – investment-friendly interest and exchange rates, the availability of corporate cash, increasing bank lending activity and global trends such as digitalisation – pointing to an imminent bounce-back in deals. Covid-19 has been another stark reminder of how deeply the Swiss economy is embedded in global supply and value creation chains – and the importance of being aware of what’s going on beyond our borders, also in M&A.

At this point, smart players will be doing two things: scrutinising the field − at home and abroad − for new opportunities in the wake of coronavirus; but at the same time re-examining their business and M&A models so that any deals they engage in create value in line with their long-term strategic intent. 

More about the Global M&A Industry Trends

“In the current situation the old rule of thumb applies more than ever: the best response to uncertainty is concerted, strategic action. Historically, companies that initiate deals early on while others wait on the sidelines reap better returns longer term.”

Marc SchmidliPartner, Deals and Valuations Leader, PwC Switzerland

Industry takeaways

travel

“Covid-19 has merely accelerated a radical transformation of the retail and consumer sector driven by major economic, technological and demographic trends. Once the dust has settled, expect to see exciting M&A opportunities emerging – but not necessarily in the places you’d anticipate.”

Martin Frey - Partner, Corporate Finance / M&A, Zurich, PwC Switzerland
  • COVID-19’s impact varied significantly across Consumer Markets – from the hard-hit bricks-and-mortar retail and hospitality & leisure sub-sectors to those that benefitted from increased demand, such as grocery retailers and e-commerce giants.
  • Vendors in more successful sectors will look to create value by triggering M&A to capitalise on their recent growth, supplemented by portfolio reviews and carve-outs.  This holds particularly true for fast-moving consumer goods companies and grocery retailers.
  • Those that lag behind, such as traditional bricks-and-mortar non-food retailers and certain hospitality & leisure players, will see an uptick in distressed M&A activity and logical industry consolidation, with the future belonging to businesses that demonstrate agility.

Martin Frey

Partner, Corporate Finance / M&A, Zurich, PwC Switzerland

+41 58 792 15 37

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eur

“The decarbonisation megatrend and the precarious status of oil will continue to fuel M&A in the energy sector – with some of the most important developments driven by Europe. But with such huge uncertainty prevailing, buyers and sellers will have to be more structured, creative and flexible in the way they approach and structure deals.”

Manuel Berger - Director, Head of Deals Energy at PwC Switzerland
  • The carbon-neutrality agenda continues to be a significant factor transforming the Energy, Utilities & Resources (EU&R) industry and a key driver of deal activity and capital availability. COVID-19 is expected to reinforce and accelerate this.
  • After recent events exposed supply-chain vulnerabilities, supply-chain deglobalisation, resilience and de-risking are gaining prominence, alongside ongoing trade disputes.
  • The dual shock of COVID-19 and the collapse in oil prices will accelerate pre-existing disruptive trends led by digital technologies.
  • This complexity, combined with an asymmetric economic recovery, will determine volume, type and size of M&A activity in the next six months.

Manuel Berger

Director, Head of Deals Energy, Zurich, PwC Switzerland

+41 58 792 23 95

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pharmaceutical

“The recent lull in pharmaceuticals and life sciences M&A is temporary. Activity will bounce back, driven by solid fundamentals and accelerating trends such as new health-tech, personalized health, medical devices and digital business model transformation.”

Claude Fuhrer - Partner, Deals Strategy & Operations Leader at PwC Switzerland
  • Pharma remains an attractive industry for investors, showing resilience to both macroeconomic challenges and the disruption caused by COVID-19.
  • Interest in the biotech sector from big pharma remains particularly high. Additionally, divestitures of non-core activities, which were driving M&A activity before COVID-19, will continue after a pause.
  • Tech-focused acquisitions that can be integrated to pivot towards digital delivery, for example by enhancing virtual trials capability or digital salesforces, will be highly attractive as established Pharmaceuticals & Life Sciences (PLS) companies realign their operations to a social distancing environment.
  • Medical devices, vaccines, therapies and diagnostics connected to pandemic response and future preparedness are expected to have attractive value creation stories and become targets for acquisitions and tie-ups.

Read the full PLS insight

Claude Fuhrer

Partner, Deals Strategy & Operations Leader, Zurich, PwC Switzerland

+41 58 792 14 23

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Luca Borrelli

Director, Head of Deals Pharma and Life science, Zurich, PwC Switzerland

+41 58 792 22 78

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computer

“Despite global trade frictions, M&A will pick up as the year progresses. Covid-19 is changing the game, so watch out for opportunities driven by business-enhancing technology, and the entertainment and infrastructure needs of a population spending more and more time at home.”

Alain Durand - Co-Head of Deals Technology, Media & Telecommunications, Geneva, PwC Switzerland
  • Certain sub-sectors of the Technology, Media & Telecommunications (TMT) industry have become more attractive to investors during the COVID-19 downturn, in particular: recurring-revenue telecoms and digital infrastructure businesses; video games; video and music streaming; technology software and services; telehealth and health IT; and digital payments and fintech.
  • Pre-existing trends have accelerated as companies look to shift to all things digital, e-commerce displaces traditional stores and consumers hasten their switch to streaming over traditional media.
  • The movement towards digitalisation, remote working and e-commerce will spur companies to use M&A to improve their technology capabilities.

Read the full TMT insight

Alain Durand

Senior Manager, Co-Head of Deals Technology, Media & Telecommunications, Geneva, PwC Switzerland

+41 58 792 91 27

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Vincent Lüscher

Senior Manager, Co-Head of Deals Technology, Media & Telecommunications, Zurich, PwC Switzerland

+41 58 792 1483

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automotive

“Covid-19 dramatically emphasized the importance of forcing digital transformation and restructuring supply chains for resilience. There are great opportunities to create value, but you need a heightened awareness of who’s on the winning and losing side of all this disruption.”

Sascha Beer - Partner, Corporate Finance / M&A Leader at PwC Switzerland
  • COVID-19’s impact varied significantly across Industrial Manufacturing & Automotive (IM&A) sub-sectors – from the crisis-hit aerospace industry to less exposed defence, engineering and infrastructure segments – both leading to interesting M&A opportunities.
  • Strategic investors have generally focused on liquidity, cost containment and short-term portfolio protection, but are also evaluating M&A as a means of securing supply chains, expanding product offerings and strengthening their competitive position.
  • PE funds continue to express interest in companies with tech-enabled business models or fragmented industries showing signs of resilience (e.g. mission-critical industrial services). 

Read the full IM&A sectors insights

Sascha Beer

Partner, Corporate Finance / M&A Leader, Zürich, PwC Switzerland

+41 58 792 15 39

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banking

“Many banks and insurance companies are seeking to address cost and other pressures via M&A opportunities in fintech and insurtech. Once the dust has settled, we’ll also see plenty of deals to converge, consolidate and build scale, particularly in asset and wealth management.”

Christoph Baertz - Partner, Deals Financial Service at PwC Switzerland
  • Banking and insurance companies will continue to seek yield in a challenging low interest-rate environment, focusing on M&A opportunities, particularly those with a FinTech angle, to take cost out of their businesses. COVID-19 has also accelerated the need for insurance companies to close any service or product gaps, with InsurTech firms a key area of focus for dealmakers.
  • We expect more industry convergence as large banking institutions, attracted by the recurring revenues generated by brokerage and wealth management firms, will look to M&A in those sectors to offset volatility in their core operations. Once government relief programs expire, we expect to see a rise in delinquencies in banks’ corporate loan portfolios, triggering consolidation, particularly among regional banks and those with the greatest exposure to the sectors hardest-hit by COVID-19.
  • We expect dealmaking to be robust in the asset and wealth management sector, driven by continued fee pressures and a desire by some firms to gain exposure to credit and other asset classes.
  • Wealth management will continue to be an active sub-sector for dealmaking, with registered investment advisors expected to drive much of the activity as companies look to M&A to consolidate and build scale.

Christoph Baertz

Partner, Deals Financial Services, Zurich, PwC Switzerland

+41 58 792 14 18

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Marc Schmidli

Marc Schmidli

Partner, Deals and Valuations Leader, PwC Switzerland

Tel: +41 58 792 15 64

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