Acquiring companies during a crisis

M&A expert’s view on the Covid-19 effect in the market

It is beyond doubt that the Covid-19 pandemic has hugely affected M&A activities throughout the world. What are the M&A experts take on the last couple of months? What are their predictions for the future? And what long-term effects do they expect the crisis to have on the M&A market?

We gathered four experts within the fields for a panel discussion on the topic. Here is a summary of the discussion. Sign up to listen to the complete recording: Acquiring companies during a crisis

Panel participants:

  • Sindre Talleraas Holen, M&A Director at Visma
  • Maria Ciani Bassetti, Executive Director at Goldman Sachs
  • Mark Zuidema, Partner at KPMG
  • Floyd Plettenberg, CEO at Dealsuite
  • Moderator: Paolo Gambirasi, Business Development Director at Admincontrol

Lockdown affected the market

During the past months, we noticed a slight drop in new data rooms initiated on our platform. This was mostly in April.  We have also seen that ongoing processes have been put on hold in the same period.

The panellists are coherent in their response to how M&A activities were affected by the pandemic at first. They have all noted a slowdown in the market during March and April, after the pandemic spreading throughout Europe, and the following lockdown and other measures taken by governments to slow down the crisis.

Maria Ciani Bassetti, based in London, described it as a first wave of shock in the market and told us she experienced a shift in focus: For many companies, it was back to the core business and adjusting to the new situation, instead of exploring M&A opportunities.

Furthermore, Dealsuite’s CEO, Floyd Plettenberg Mark Zuidema from KPMG, both shared insights from surveys they had conducted that underlines the same. Sign up for the panel recording to listen to survey results.

Less affected, it seems, is Sindre Talleraas Holen and his M&A team at Visma. While Visma also had some large processes put on hold in March and April, in Visma’s core segment, the 1 – 5 mill EUR EBITDA, the market is still very active, he says.

Visma has closed 16 deals in 2020, and eight of these were completed after the pandemic hit. Before taking a summer break, Talleraas Holen says their aim is to be at 20 acquisitions.

pre due diligence preparations
The Covid-19 pandemic affected different segments and sectors differently, software and tech were less affected than other industries

Software & Tech

The crisis hit the market at the whole, but not all sectors and industries were as affected as others. Mark Zuidema reports of Private Equity showing more considerable interest in the tech and software sectors than before, after seeing opportunities to invest in the digital infrastructure that has played an essential role in the ‘new normal’ work life.

For Sindre Talleraas Holen and Visma, this is a core market, and he points to the tech-savviness and digital tools at hand, to explain why they are still close to “business as usual”. The same digital competence can probably explain why Sindre and his team recently conducted a complete due diligence process without any physical meetings with the counterparty.

Opportunities ahead

On Admincontrol’s platform, we see that an increasing number of new processes are being initiated. We saw an increase of 66 % in new portals activated from April to May. That means that we are almost back at “pre-pandemic” levels, and this could indicate an increase in M&A activities in the time ahead.  

Almost as coherent as on their response about the past months, the panellist is positive about the times ahead. The market is picking up, faster than the first analysis predicted. Floyd Plettenberg sees an increase of distressed propositions on the Dealsuite platform while Mark Zuidema reports of Private Equity firms with a lot of dry powder at hand.

prepare for due diligence
A crisis is also an opportunity – it is still essential to be ready if opportunities come knowing

Be ready to go!

Almost one-third of the new data rooms that have been opened since May this year has started at a preparation phase.  This indicates that companies have begun planning and preparing for an M&A process in the next 6-9months.

From our discussion with the panellist, it was evident that a crisis can also be an opportunity. When being asked to advise companies planning an M&A transaction soon, the advice circled around how companies can prepare and make the most of the situation at hand. Also, it is safe to say that companies should also be prepared for less physical due diligence processes and more digital meetings in future processes. Sign up to the recording to listen to all the advice.