Global dealmaking has been brought to a standstill in the past few weeks and activity is likely to remain subdued for the coming months, according the Mergermarket's Q1 global M&A trend report.
After nearly 10 years of growth, global M&A activity is down 39.1% by value compared to the same period last year, and back to levels not seen since the first half of 2013. Dealmakers will inevitably look back at similarities in 2008's financial crash to find lessons learnt, despite the different nature of this global pandemic.
Social distancing measures needed to contain the COVID-19 virus will be particularly disruptive to mid-market M&A because they impede site visits and physical face to face meetings. Dozens of private equity auctions have been put on hold or postponed and many owners of family-owned businesses will retire one or two years later than planned.
In the short term, the current market volatility will further dent the confidence needed to embark on bold, strategic moves. This year is unlikely to repeat the megadeal frenzy of 2019 when 38 such deals were announced. The last one-to-date, the pending $35bn tie-up between insurance giants Aon and Willis Towers Watson, was announced on 9 March.
Before the storm, Private Equity activity had enjoyed a robust start to the year. However, with the primary market for leveraged loans temporarily shut down, the number of buyouts has dramatically decreased in the past month, and Private Equity’s ability to deploy capital will be further tested in the quarters to come.
The Mergermarket team will be discussing these topics live in our UK M&A outlook webinar on 7th April at 2pm GMT. Sign up to watch here.