M&A Under Lockdown | The Corona Correction | Refinitiv

TL;DR

COVID-19 has led to a significant decline in M&A activity, resulting in record lows for deals. Sectors like consumer, retail, media, travel, and technology may see opportunities for expansion and bargains for diversification.

Transcript

Welcome to the Corona Correction Series in association with Refinitiv, I'm your host Roger Hirst. A few weeks ago we spoke to Refinitiv's Cornelia Anderson about the trends in M&A. Whilst there were some opportunities for the nimble dealmakers, the lack of face to face negotiation was expected to put the brakes on this sector. I asked Refinitiv's D... Read More

Key Insights

• 🔠 M&A activity, equity capital markets, and debt capital markets have reached historic lows due to COVID-19.
• 🗺️ Sectors such as consumer, retail, media, travel, leisure, hotels, and airlines may need to adapt and reimagine their operations.
• 😘 Tech companies with significant cash reserves may explore M&A opportunities in industries affected by lower valuations.
• 😶 Boutique investment firms may face survival challenges if dealmaking remains muted, leading to potential consolidation or acquisition.

Questions & Answers

Q: How has COVID-19 impacted M&A activity and deal making?

COVID-19 has caused a significant decline in M&A activity, with record lows in deals. The pandemic has disrupted negotiations and face-to-face meetings, hindering dealmaking.

Q: Which sectors might see opportunities for expansion post-crisis?

Sectors like consumer, retail, media, travel, leisure, hotels, and airlines may have opportunities to reconfigure their operations and restart. This could also lead to potential bargains for companies looking to diversify.

Q: How might tech companies with large cash reserves respond to the crisis?

Tech companies like Apple, Alphabet, Amazon, Facebook, and Microsoft may consider moving into new industries or bringing their supply chains in-house. Lower valuations and stock prices may encourage them to engage in M&A activities.

Q: How will the decline in dealmaking impact boutique investment firms?

Boutique investment firms heavily rely on M&A activity for their business. A sharp decline in deals may severely impact their revenues and survival. Some boutiques may consider consolidation or be acquired by regional banks.

Summary & Key Takeaways

• M&A, equity capital markets, and debt capital markets have reached near record lows due to the global lockdown.

• Last week marked a 16-year low with no M&A transactions over one billion dollars.

• Sectors such as consumer, retail, media, travel, leisure, hotels, and airlines may need to reconfigure and reimagine their operations, while potentially offering opportunities for expansion and diversification.