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.
“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.”
“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.”
“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.”
“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.”
“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.”
“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.”
“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.”