Global activities related to merger and acquisition (M&A) have gained momentum from its decade-low point in 2020. The string of large transactions is becoming strong this year, that dealmakers hope will continue ahead. Industry experts have termed it as a tale of two very different halves in a year, as the world has experienced a sharp decline in M&A activity during the pandemic, but then experienced a good response when government started relaxing certain restrictions.
The way business houses have done the transaction has also changed, as bidders spent more time conducting due diligence. The head of the UK pharmaceutical giant signed the largest-ever deal while sitting in a hotel room somewhere in Australia. Big bankers and other financial firms have switched to video conferences, either from their home or nearly empty office cabins. As government authorities ordered to shut down the cities, in the first few months in 2020, the sudden chaos left management bodies of companies too busy, to complete the ongoing acquisitions and deal-making almost got off within few weeks.
On the other side, instead of opportunistic mergers, most of the deal that was halted due to certain reason has helped companies to somehow stay afloat. The tourism, hospitality, and entertainment-related businesses have gone through the worst situation during pandemic, while the airline industry received federal aid and public funding, whereas, some other industries grabbed private equity investments. Many mergers and acquisitions came back in the third quarter, when CEOs and management of the firms rushed to work on the deals that were left on hold, when the COVID-19 pandemic reached its height resulting in complete lockdown in many cities across the globe. The boardrooms also gained some confidence after almost 15 weeks of roller-coaster period.
Most of the deals inked recently with more than $1 trillion worth of transactions, across the sectors which were mostly focused on technology, healthcare, and other certain sectors, which can be considered as coronavirus-resilient industries. Many company leaders believe that the one way out of this crisis is merger and acquisitions, which needs engaging talks with CEOs and board of directors for creating a plan of strategic position post-COVID era. Many businesses that we’re unaware of a need to consolidate the business have realized the importance of stronger and well-equipped business to remain ready to deal with what the world has to offer in the future.
In the United States, the total of all deals was worth more than $400 billion, while Europe signed deals of around $230 billion and Asia-Pacific has spiked by 66% to $280 billion. The market has started to bounce back quite rapidly. In many countries in Asia, the momentum of merger and acquisition is much stronger than it was before the pandemic. In Europe, long waited season of deals in the finance industry has kicked off over the summer, with many Italian and Spanish banks finalizing the talk, raising the expectations that other rivals in the region might follow the same suit. In general, the pandemic gave a reason to consider the importance of portfolio diversification which has resulted in the increased willingness of big corporations to market uncertainty and potential opportunities.
