As we entered 2020, the global M&A market was in a resilient position, having had very robust transaction values and volumes for a number of years immediately preceding. Now, with almost a year of a global pandemic behind us and in light of continuing uncertainty, we take a look at the current environment for M&A, Investment and transaction professionals.
We remain in the midst of the single most impactful global event of our times. With Covid-19 still hugely prevalent across the majority of the western world, its presence among us undoubtedly creates some continued uncertainty as it relates to capital deployment and M&A activity. The very fact that travel is severely limited within most jurisdictions leads to a more challenging “deal making” environment, not to mention the impact of economic hardships created directly as a result of the pandemic.
With vaccine rollout not underway in every country, there is optimism that we are on the road to “normality” and while this may not initially look like our pre-Covid normal, there is merit in this positivity. The safe return to normality for the economy is of paramount importance to i) boost consumer spending; ii) improve investor sentiment and iii) the re-opening of some severely impacted sectors including hospitality, retail and construction.
What does this mean for M&A and Investment Professionals?
While it remains a somewhat frustrating time, we deal volumes in 2020 were credible and 2021 is expected to remain so. Some of the key things to consider for the next step of your career journey can be listed below:
- Sectors: Which sectors am I most interested in, and which are likely to be active. Obvious areas of activity include the more Covid-19 proof areas of Technology, Healthcare/Pharma and Food/Agri but increasingly there will be value opportunities in other sectors (e.g. hospitality) where players will seek to consolidate and/or fundraise.
- New Trends: Increasing, M&A and Investment professionals will have to factor ESG and sustainability considerations into their approach for dealmaking.
- Valuation: “out of adversity comes opportunity” has through every economic cycle proven to be true. Valuation gaps typically prove to be the most common factor in the failure of a deal to close. There is evidence that valuation gaps have narrowed in certain sectors, and this will in time, lead to an increase in deal activity.
- Timeline: While nothing can be delivered with certainty in this environment, it is reasonable to suggest that based on current evidence, we will see a significant increase in normal activity by Q4 2021. Therefore, it is a good time to review your own deal book and your value proposition. What can I add value to? What are my selling points? What did I learn about the deal process during COVID-19? Having your value proposition up to date will ensure that you are ready to move on time, for the right opportunity.
At FK International, we have over 20 years’ experience in assisting our clients and our candidates who are at the forefront of M&A and Investment activity in Ireland.
Our Director, Ger Buckley would be delighted to arrange a confidential discussion at any stage as you consider your options…