M&A deals have declined by 13% in the first half of 2020 compared to this point in 2019. The dollar value of deals has declined by 43% since last year at this time. Companies in today’s uncertain environment due to the Covid-19 pandemic, global economic uncertainty, the upcoming US election, and racial unrest, must find creative ways to capitalize on opportunities and must adapt to survive long-term.
Thorough due diligence and strategic analysis in deal-making can help with long-term sustainability. There are opportunities for mergers and acquisitions, as corporate capital is flush, government stimulus has helped the financial and banking industries, and interest rates are incredibly low.
Emerging markets and developed international markets in places where Covid-19 is on the decline are strong areas for US companies and investors, as the dollar is strong, and though companies have turned inward and focused locally during Covid-19, global opportunities persist for those who seek them out. With bankruptcies on the rise, distressed industries can be acquired or invested in on the low end, and with patience and long-term thinking, these industries are likely to rebound post-Covid-19.
Firms such as PwC recommend a value creation and long-term, thought-through approach as opposed to short-term, opportunistic deal-making.
Material Adverse Effect (MAE), force majeure, and deal insurance are highly important in this time of uncertainty. Contract drafting with attention to detail and inclusion of the force majeure and MAE terms “pandemic,” “riot,” and “insurrection” are relevant and necessary for the foreseeable future. Goosmann Law works diligently to cover every aspect of a deal, conduct thorough due diligence, and discuss long-term growth and capital strategies. We pride ourselves on assisting companies with strategic long-term sustainability and on following through, and we close deals. Planning for all contingencies is essential, so while we work at the rapid pace of business, we also plan and strategize meticulously.