At this point, it’s not exactly news that 2020 hasn’t been a great year for M&A, but there are signs that activity has been picking up over the past few months. According to a recent White & Case survey of 250 senior M&A executives, dealmakers are feeling a bit more optimistic about the coming months as well. Here are the key takeaways from the survey’s results::
– Executives expect M&A activity to rise in the next 12 months—but not to pre-crisis levels. Almost three quarters of executives expect their companies to do more deals in the next 12 months compared with the previous 12 months.
– Streamlining will stimulate dealmaking as businesses fight to survive. The short-term increase in M&A activity will likely be driven by companies’ efforts to trim down and focus on the core areas of their businesses.
– Internationally, US dealmakers are most interested in the UK and China, despite geopolitics. Executives identify the UK, China and Germany as markets where they see the strongest international opportunities.
– Stocks are overvalued—but executives think another crash is unlikely. Six out of ten executives believe the stock market is overvalued, but only 15% expect another stock market crash.
The bottom line seems to be that, whether they are focusing on survival or growth opportunities, many companies anticipate that M&A will be a “critical lever” for their efforts to recover from the current crisis. But the emphasis definitely appears to be on survival — with more than 75% of the survey respondents indicating that they expect their companies to be focusing on defensive moves, and only 21% positioning themselves for growth.
-John Jenkins, DealLawyers.com September 30, 2020
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