Global dealmakers: European M&A market update 2020

The world certainly has changed since our ‘Global dealmakers: Cross-border M&A outlook 2019’ report released last October. For Western Europe, the strong dealmaking year for the mid-market segment in 2019 was expected to continue in 2020. The beginning of 2020 was a good start, both in terms of number and average M&A deal size. However due to the outbreak of Covid-19 transactions were put on hold and mainly strategical buyers showed a more cautious attitude.

The uncertainty around the Covid-19 pandemic has shaken markets and populations globally, it remains to be seen what kind of impact Covid-19 will have on dealmaking in Europe and globally. Nevertheless, we noticed that transactions (re-)started and the appetite for acquisitions grew in most of Western Europe. Attitudes have shifted regarding the onset of recession regionally and globally. Now, as governments around the world push stimulus measures and execute strategies in response to what has become a global health crisis, it has quickly become a question of “When will the recession be over”, as opposed to “When will the recession hit?” Covid-19 and each government’s response is also likely to drive some of the trends emerging in Europe, such as protectionism.

This report explores the current challenges shaping the European M&A market in addition to the main drivers behind cross-border deals and key markets where opportunities can be found.

Key findings of the European M&A market update 2020

  • Pandemic shapes M&A intentions: 73% of dealmakers say they are decreasing M&A in Europe due to the spread of Covid-19.
  • The spectre of recession: 92% of respondents say a recession in Europe will unfold within the next 12 months – and 100% say a global recession is imminent.
  • Global cross-border M&A to stall: 83% say Covid-19 will have a negative impact on global cross-border M&A through 2020 and possibly beyond.
  • Opportunities are still abundant: 18% say there are better mid-market opportunities in Europe compared to other regions globally and 87% say there is great and growing opportunity to make investments in European medicinal cannabis.

“While some sectors in the Netherlands have been severely affected and deals put on hold, the opportunity exists for Private Equity firms to support management buy-in’s in restructures to small and mid-sized enterprises. Following this crisis, we expect a further increase in cross-border opportunities, enabling larger firms with great amounts of cash to acquire smaller enterprises on favorable terms.’’ – Lorijn van Leersum – Partner Baker Tilly Netherlands

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