How could the Delta variant impact the dealmaking landscape? The prospect of new lockdowns and an attendant slackening of demand across sectors appears to have receded from the minds of most M&A practitioners even as Fall approaches. Economic catalysts remain strong, and perhaps just as importantly, companies have instituted new workarounds to make a world living alongside Covid profitable.
“What really happened in the first shutdowns is that there was free-floating anxiety,” PJ Solomon CEO Marc Cooper tells us. “We didn’t know what was going to happen. The lack of knowledge is what causes people to get scared. Now that we’ve lived through it, we know the sectors that get impacted but we also know they’ll come back. I don’t see Covid as an issue going forward; it’s not going away, but it’s a part of our life that we have to deal with.”
Still buoyant capital markets, record levels of liquidity and attractive returns remain powerful catalysts. Fluency with Zoom and remote working software tools have enabled an environment for near-seamless transactions, EY global buy and integrate leader Brian Salsberg told Mergers & Acquisitions.
The impact from future pandemic spread is likely to be industry-specific, Cooper notes, as opposed to a market-wide slowdown. Even now, the post-Covid rebound in M&A has been uneven. Oil & gas and retail exclusive of direct-to-consumer channels have been impacted, he notes.
“The view is that we’re not going to see a second shutdown,” says Cooper. In which case, the market’s sanguine view on future upside appears justified.
— Brandon Zero