After a period of hibernation, there are now signs of life returning to the M&A markets. In just the past week, we have seen a trio of financial sponsors announce the takeover of Spanish telecoms operator MasMovil, in a €5bn deal that is one of the biggest since the pandemic began, followed by reports of a group of French billionaires circling the wagons around industrial giant Lagardère to fend off an activist investor. We also saw the news that one of their own – LVMH chief Bernard Arnault – was considering a range of tactics in a bid to revisit the deal signed before the COVID-19 pandemic to acquire luxury goods icon Tiffany.
How activism and deal terms are evolving are just two of the themes in our new report "Beyond the pandemic: the future of M&A", which looks at the potential long-term impact of COVID-19 on deal-making. At a macro level, we expect the crisis to turbocharge the impetus for technology acquisitions as businesses scramble to build more resilient operating models, while the drive among governments to create more resilient national economies is already raising barriers to foreign investment.
Other topics we explore include the prospects of a financial sponsor-led investment spree, although we also ask whether traditional LBO strategies and deals built on synergies (read layoffs) may need a rethink in a post-COVID world.
Then there’s the potential for the pandemic to drive changes to the practice of M&A if travel restrictions and other practical limitations make it hard to do the nuts and bolts of what deal makers do (such as detailed due diligence) for an extended period. In an environment where buyers can’t meet with management or visit facilities in person, and may not even have access to financial statements that have been audited in the traditional way, sellers will need to use a combination of creativity and pragmatism to present their businesses for sale.
We hope you enjoy the report, which you can read here. We’ll be staying across these and other deal-making trends as economies come back online over the coming months, so please reach out if there’s anything you’d like to discuss in more detail.
