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M&A Activity Update Q1-2020

European M&A activity started the year in good shape.  According to financial data specialists Pitchbook, there were 2,667 transactions closed in Q1-20 worth €281Bn – 11% uptick in deal value compared to Q1-19.  Overall this concluded a 10-year bull-run in Europe for M&A transactions. 

Of course, with a 6 – 18-month gestation period, much of this Q1-20 value will be the culmination of deal-making in 2019.

As COVID-19 has ripped through the European economy at the close of Q1-20, much of the current deal-making has slowed considerably.  Travel restrictions and social distancing have complicated M&A processes – on-site due-diligence and face-to-face meetings remain an integral element to deal-making – so this will remain a challenging issue through this year.

It is probable that deal-making will remain subdued for the remaining part of 2020.  A recent survey by Dealsuite (a proprietary M&A platform) indicated that:

  • 60% of all M&A firms had c.50% of sell-side projects on hold
  • 30% of all M&A firms had all sell-side projects on hold

Whilst a considerable volume of projects have been put on-hold, only 25% of respondents had 50% or less projects terminated.  Which indicates that in short, the market for deal-making has been mostly furloughed. 

Undoubtedly deals in the leisure, travel and entertainment markets will be slow to return until a proven vaccine is created.  Markets that we are active within (manufacturing, technology, digital) are expected to return quicker.

M&A for IT in Europe had increased significantly over the last decade and into 2020, with €68.1Bn in Q1-20.   IT within Europe still does not compete scale-wise with the US, but Euro companies have been slowly maturing and improving their financial desirability for potential deals.

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