At a global level, the majority of M&A activity has been paused or cancelled across industry sectors as companies assess the impact of the Coronavirus pandemic as well as the potential impact of a prolonged period of uncertainty on their business plans. Both the volume of transactions as well as the value of transactions were lower across the board, particularly for deals valued at $250m or more.
According to data from the Institute of Mergers, Acquisitions and Alliances (IMAA), during the first nine months of 2020, global M&A activity for larger deals were at levels not seen since the global financial crisis. The need for investors to re-assess and account for recession risk within their M&A plans has become a higher priority.
While overall M&A activity was considerably lower relative to prior years, some deals were still executed, particularly where the acquisitions (or disposals) were fortifying and strengthening for both parties. For example, whereby the disposal significantly improves cash and liquidity and the acquisition provides longer-term scale and growth within an existing core business, offsetting some of the short-term risks associated with an economic slowdown and recession. There appears to be greater risk aversion and companies pausing M&A where the additional risks of cross-sector and cross-border integration are present.