As U.S. hiring figures stutter in August, potentially due to Covid-related business pullback, dealmakers remain sanguine on the prospects for M&A dealflow. Why the confidence? Still buoyant capital markets, record levels of liquidity and attractive returns remain powerful catalysts.
The Delta variant’s emergence is less of a surprise to the market this time around.
“After round one, a couple things happened,” says EY global buy and integrate leader Brian Salsberg. “There was a very significant pause from March 2020 to April/May when everything shutdown and no one knew if the world was going to end. Once people saw we could navigate this deal activity, not only picked up but exploded; we’ve both had a lot of learning about the pace at which these deals can get done, and the tools have been built.”
Fluency with Zoom and remote working software tools have enabled an environment for near-seamless transactions.
“There wasn’t a playbook for how you do due diligence or how to work in a Zoom environment, but now that that’s been learned,” Salsberg explains. “Variants don’t scare people; I also think the markets aren’t spooked by this either, which means there’s plenty of access to capital and stock prices have held up.”
It’s a widely shared view. M&A activity remains robust despite a resurgence in Covid case volume, PwC private equity lead Manoj Mahenthiran says. Market leaders like fintech and healthcare are buoyed, if anything, by investor fears about a return to remote work and pandemic-level illness.