Suzy Bibko, Content Marketing Manager, EMEA
Many companies across all sectors have become vulnerable due to the recent market challenges. The result: a greater need for restructuring than we have seen for quite some time. During our recent webinar, our panellists – Chiara Elisei, James Slessenger, Merlin Piscitelli, William Jenkins, and Andrew Wilkinson – as well as dealmakers shared their thoughts on the outlook for distressed M&A, the types of restructuring that will dominate going forward and what technology would help them the most. And while there is no immediate fix for the current challenges, the good news is that people and businesses are working towards finding the right solution sooner than later.
Market sentiment: Distressed M&A is here to stay
As the market has dramatically changed in the last month, many investors likely still think we’re in for a further rocky ride. So, is there any opportunity for both companies and investors? We asked dealmakers whether distressed M&A in Europe is here to stay going forward. Perhaps unsurprisingly, most of our respondents believe that it is. Companies are trying to determine how to navigate through the uncertainties – and there is no precedent for the current situation.
“I don’t think there’s going to be a light-switch moment when businesses recover from the current situation,” says William Jenkins, Managing Director, Alvarez & Marsal. “I think it’s going to be a prolonged recovery. And there are quite a wide variety of sectors that are going to face some challenging issues. Moreover, no one knows how the current crisis will unfold, so companies should be coming up with different scenarios for a quick recovery.”
The options: Debt-financing and administration, not liquidation
What are the options and what will dominate going forward? The good news is that dealmakers think liquidation seems to be an option of last resort, and that most companies will try to restructure via debt-financing or perhaps going into administration. This coincides with current European government measures focused on actively helping businesses in trouble rather than applying punitive measures, as they have done in the past. Perhaps this will be the route to recovery and navigating the current storm.
Technology: The immediate solution
Moreover, the current situation has sped up the need and ability for everyone to work effectively remotely, so companies can strive to achieve as much normality as possible during this time. With restructuring, speed, efficiency and the ability to do deals virtually are extremely important to achieve results before it’s too late – companies need solutions now. Dealmakers believe that the ability to load large volumes of data quickly is by far the most important need, followed by staging a data room. This makes sense: if data cannot be uploaded quickly into a virtual data room, then the dealmakers are not going to be able to get the deal done quickly.
“Right now, we are seeing many companies in various phases of restructuring, from strategic review to forced liquidation, but with more and more clients preparing for some level of restructuring impact from the crisis,” says Merlin Piscitelli, CRO, EMEA, Datasite. “Our technology is built exactly for this situation. Many companies are weighing their options right now as to how they can still reach their goals. Datasite helps dealmakers be restructure-ready, whether in the office or at home, and adds foresight, speed, security and quality to the process, whether for debt financing, distressed asset sales, equity financing, accelerated M&A, or even administration.”