Pivoting to next and beyond
For the vast majority of companies, dealing with what is happening now is their first concern. However, the lessons learned from the global financial crisis show that this could be an opportunity to acquire high-quality assets that will accelerate growth when the market recovers.
Expectations for the M&A market have been throttled down …
Half of those surveyed after February 19 expect to actively pursue M&A in the next 12 months (49%), down from 59% in October 2019. Given the rapidly evolving situation and the fact that additional restrictions have been confirmed since the survey closed, the dealmaking intentions expressed are likely to have further deteriorated.
… but a full stop is not expected
A quarter of respondents reported seeing the current situation as an opportunity to gain market share, with 48% of respondents expecting valuations to come down, potentially leading to more attractive entry points for strategic investments. Any dealmaking that proceeds will apply increased due diligence rigor, as 27% plan to increase their focus on the target’s business resilience while evaluating a transaction.
So, while focusing on the immediate implications of COVID-19 is the No. 1 priority, executives are also having to plan for next and think beyond.