The New State of Play: M&A Leaders Offer Insights in the Wake of a Pandemic

By Marcio Moerbeck, Vice President, Field Marketing - Americas

On September 24, we partnered with the Financial Times to host a panel discussion to examine the immediate and long-term impact of the pandemic on the Americas M&A market. Leading dealmakers discussed how today’s historic events have led them to step back and re-examine some basic assumptions about how they think about deals and seize new opportunities. Read an overview of their perspectives below, or review an on-demand replay of the webinar here.

The global pandemic has shaken up all the rules in the Americas M&A market. Since the outbreak, dealmakers have been asking themselves how the pandemic will impact corporate M&A strategy. The big question is whether the crisis will trigger a major paradigm shift in deal-making—and, if so, what the “new normal” will look like. To map the way forward, we brought together a panel of top M&A leaders:

• Marco Caggiano, Co-Head of North America M&A, JP Morgan
• Jessica Elengical, Head of Corporate Strategy and M&A, DWS Group
• Anthony Tutrone, Global Head of NB Alternatives and a Managing Director of Neuberger Berman
• Mark Williams, Chief Revenue Officer, Americas, Datasite

Sujeet Indap, US Lex Editor at the Financial Times, led an informative discussion that reviewed the past year and offered a look ahead. Panelists discussed some of the ways COVID-19 has transformed deal strategies, and even some of the basic processes involved in getting the right people together to execute. Despite today’s challenges, many of the lessons from previous M&A cycles still apply. Here are some highlights from the discussion.

Even a pandemic can’t stop collaboration

The deal making world is all about forging direct connections and nurturing trust by meeting and talking with people in person. As organizations moved to remote teleworking and videoconferencing this past spring, there were big concerns that social isolation would bring M&A activities to a halt. But our panelists agreed that remote conferencing actually offered some advantages to relationship building.

Marco Caggiano noted that although it’s more difficult to meet with stakeholders for lunches, dinners, and drinks, videoconferencing makes it much easier to assemble global teams on short notice. Scheduling a meeting between three executives from London, New York, and Tokyo used to require weeks of planning. Now, clients can meet on Zoom to talk about transactions with a day’s notice, accelerating the pace of meetings and negotiations.

Mark Williams observed that the transition to remote work has provided new opportunities to get to know his team better. While collaborating with colleagues remotely, he has met children, spouses, and even pets that he would never have encountered in an office space. Mark noted that one of the top challenges of today’s new normal is maintaining work-life balance. He strongly recommended a renewed focus on establishing and maintaining routines and schedules to keep work and home life separate. 

After a brief pause, volume is picking up

Our panelists agreed that we’ve witnessed lots of volatility and uncertainty in the markets in March and April. According to Marco Caggiano, JP Morgan initially received numerous calls from individuals who wanted to take advantage of any drop in valuation of companies that they had been tracking for a long time. These bargain hunters viewed the market turmoil as an opportunity to get a great value on an acquisition or minority investment. However, surprisingly few opportunities emerged, as most companies were not interested in selling at a “Corona-affected” price. After a period of retrenchment, the global volume of M&As escalated in July and August, and is now 8 percent higher than 2019. 

Anthony Tutrone observed that sentiment among private equity firms is similar, expressing surprise in how quickly public markets rebounded. He has seen a large pickup in the North American M&A pipeline, and predicts that the next six months will be extraordinarily busy. 

Where are companies finding the confidence?

Our panelists noted that many of the companies experiencing the highest volumes of M&A have not been negatively impacted by COVID-19. Some sectors, such as technology and healthcare, have even seen benefits. Jessica Elengical noted that the crisis has accelerated and reconfirmed some existing trends, such as evidence of a long-term low-interest rate environment. She suggested companies may wish to align their activities around some of these types of reconfirmed trends. 

Building on learnings from the past

Although today’s changes are unprecedented in many ways, our panelists agreed that many of the lessons from previous crises can help chart a way forward today. Anthony Tutrone observed that private equity firms applied the lessons they learned in 2008-9, and immediately began cutting costs, conserving cash flow, and building liquidity when the pandemic crisis began. These prudent steps enabled them to quickly return to playing offense when short-term fears began to ease. 

One important takeaway from the discussion is that M&A volumes are on the uptick again, and plenty of opportunities are arising for companies with the right approach. Jessica Elengical suggests that maintaining maximum flexibility and agility are key, and the organizations that can apply both will be well-positioned to achieve profitable deals in the short term, and well in the years to come.