Is This The Time for Mergers and Acquisitions? – Lee Chandler

It’s certain that COVID-19 has caused a huge shift in the state of the United States economy. One of the pressing questions companies have to ask is whether or not M&A deals are better to carry out during this time. There are arguments to each side, both of which should be explored to determine whether M&A agreements have a place in the pandemic or not.

Those that argue that this is an inconvenient time for Mergers and Acquisitions base their statements on the market performance. A survey was conducted by the Harvard Business Review to determine the impact of the coronavirus on current M&A deals. In this survey, 51% of respondents indicated that they would put a pause in the meantime to assess the condition of the market (Bender 1). On top of this, M&A’s have been tough because of the recent Pandemic Anti-Monopoly Act, which limits the power of corporations looking to acquire.

On the other hand, some see the pandemic as a win-win situation to acquire smaller firms. Acquisition deals help companies that are suffering losses due to COVID-19. They also allow consumers to keep receiving products consistently from these failing companies (Hirsch 1).

Source: Refinitiv Perspectives Tech Information Provider

The graph above shows the numbers associated with M&A agreements in 2020. M&A, equity, and debt deals show an increase in companies conducting agreements throughout the year. Some companies don’t even see the pandemic as a restriction for their deals. From the previously mentioned survey, 23% of companies responded that they were not going to slow down or pause deals and that instead they would accelerate them in this time (Bender 1).

As a final word, the coronavirus pandemic has caused a dent in the M&A market and definitely slowed down deals for many companies. However, it’s also important to note that other companies instead see COVID-19 as a relief opportunity for small firms. As the pandemic persists and eventually concludes, we’ll see the true impact on these acquisition deals moving forward.

Works Cited

Bender, Mark Herndon and John. “What M&A Looks Like During the Pandemic.” Harvard Business Review, 19 June 2020, hbr.org/2020/06/what-ma-looks-like-during-the-pandemic.

“COVID-19 Bursts M&A Activity Optimism.” Refinitiv Perspectives, 12 May 2020, www.refinitiv.com/perspectives/market-insights/covid-19-bursts-ma-activity-optimism/.

Hirsch, Scott. “Council Post: Strength In Numbers: This Is The Time For Mergers And Acquisitions.” Forbes, Forbes Magazine, 2 July 2020, www.forbes.com/sites/forbesbusinesscouncil/2020/07/03/strength-in-numbers-this-is-the-time-for-mergers-and-acquisitions/#33cda50215d6.

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