Insights from the global M&A market in 2020

2020 was an unprecedented year for the M&A market. As has been discussed previously, after a dramatic downturn caused by the corona crisis, the market recovered strongly in the second half of the year. Within the global landscape of M&A, there were a number of key developments and trends. These trends and developments have been reported in the Global M&A Report 2021, published by consultancy firm Bain & Company (link at the bottom of the page).

Digitalisation of M&A processes

A major impact of the corona crisis was digitalisation. Within companies themselves, a McKinsey Global Survey of executives found that the corona crisis sped up the digitalisation of internal operations by three to four years. Within M&A transactions, the corona crisis forced parties to conduct virtual due diligence, as well as virtual negotiations and integration. Despite technological advances brought about by this process, digitalisation also created particular difficulties. For example, the corona crisis restricted on-site visits and other key components to the due diligence process. Within its report, Bain & Company found that 70% of M&A practitioner survey respondents stated that remote due diligence was particularly difficult.

Governments and regulation

Bain & Company’s report also highlight the increased role played by governments in global M&A transactions in 2020. Examples of this include the German government's approval of new powers to reject hostile foreign takeover bids of healthcare companies, including German manufacturers of vaccines and medicines, and China Mengniu Dairy's withdrawal from purchasing the Australian beverage company Lion Dairy, after receiving an indication that the transaction would be refused by the Australian government. This development shows the need for cross-border investors and practitioners to continually keep up to date with regulations within foreign markets.

Localisation of deals

Another trend reported by Bain & Company in 2020 was the localisation of deals. This was exacerbated by concerns over supply chains as a result of the corona crisis. In regards to cross-border transactions, the report outlines a fall of 29% for Asian outbound deals into the US and Europe in 2020, while global cross-regional deal volume fell by 20%.

Industry dependant valuations

Unsurprisingly, certain industries fared better than others in 2020. Industries such as technology, telecommunications, digital media and pharmaceuticals thrived as a result of the corona crisis, with valuations increasing. On the other side of the spectrum, industries such as retail and energy saw their valuations decrease.

For the full report see the Global M&A Report 2021.

At Blenheim, we have extensive experience with the entire transaction process and have assisted companies in navigating the impacts of the corona crisis. For questions regarding this topic, or assistance with a pending or concluded transaction, please do not hesitate to contact Blenheim’s corporate team.

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