M&A Update – Market patterns post COVID-19

The latest M&A stats for May 2020 are now available with the obvious contraction in deal numbers being revealed as market activity continues to decelerate in the wake of COVID-19 and lockdown measures.

At the date of publication, announced deal numbers show another month of reduction with a fall in excess of 10% noted in comparison to April 2020, and a reduction of around 50% when compared to a twelve month average and almost 60% when compared with May 2019.

Overall deal size has held strong, with notable deals such as the O2 / Virgin Media merger and Boohoo’s investment into Pretty Little Things propping these figures up.

Despite the recent relaxation of insolvency rules we are now seeing more activity of a trade and asset nature, with the retail and casual dining sectors being those where such activity is becoming prevalent. It is also apparent that small deals, sitting beneath £50m in value, are less frequent and that a strong element of deals include listed buyers who, by their nature, often have greater means to generate liquidity to support M&A.

Ultimately the longer term implications of COVID19 are not known, although the summer may see a change in the nature of deal flow. There is an expectation that COVID-resilient businesses may be capable of attracting strong valuations, especially now the PE community have re-emerged and operate with significant and ever increasing capital which must be deployed.

Accelerated sales, mergers and those involving insolvency processes generally will become more apparent, albeit the cash rich and larger operators already sit in waiting for opportunities.

Contact us

Our Corporate Finance team at MHA Tait Walker have been the most active the North East over the last 20 years and are currently working with a range of business owners looking to dispose, acquire and / or raise capital.

If we can help you with any such venture, please contact Lee Humble at lee.humble@taitwalker.co.uk.

Please note: all deal statistics outlined have been provided through publicly available information and access to deal platforms to which we are licensed members. These figures may be subject to change and may exclude off market or undisclosed transactions.