14 Jul The Impact of the Cornoavirus Crisis on Mergers and Acquisitions
By Richard D. Harroch, David A. Lipkin, and Richard V. Smith
The coronavirus (COVID-19) crisis is having and will continue to have a material global impact on mergers and acquisitions (“M&A”). On a massive scale and in a very short period of time, hundreds of thousands of businesses have shuttered or cut back their operations significantly, millions of workers have been laid off or furloughed, consumer spending has been drastically reduced, supply chains have been disrupted, and demand for oil and other energy sources has plummeted.
The M&A world has endured and recovered from past economic crises, including the burst of the dot-com bubble in 2000-2002 and the Great Recession of 2007-2009. As in past financial and economic crises, uncertainties in the business and capital markets have already contributed to buyers delaying or cutting back on their acquisition plans. But this time things are different—the impact of the pandemic is not just on the financial system generally, the valuation of sellers, and the appetite of buyers to get deals done in the short term, but on a multitude of other factors affecting M&A deals.