Mergers in a Time of Crisis

What impact will this coronavirus pandemic have on mergers and acquisitions? It’s tempting to think that they will all grind to a halt whilst everyone works out what the new world order will look like. However, our experience is that sometimes a crisis necessitates the need for quicker mergers.

Certainly, some more standard M&A deals have been put on hold, or certainly put on the back burner, whilst businesses focus on securing their business to deal with the new reality.

But sometimes a crisis can force the business into a merger situation which it would not have considered previously. It’s an old M&A adage that you can put two small poorly performing businesses together and end up with one big poorly performing business, but businesses may have to merge to survive, and that creates opportunities for nimble and well run firms.

The only issue we are having to deal with at present on on-going mergers is how to complete. Normally the acquiring party would visit the offices of the firm being acquired, meet the staff, take control of the bank accounts and generally make their presence known. That is of course not possible in lockdown, as a non-essential travel is banned and most visit would be met with an empty office as most staff are now working from home.

That aside, there is nothing to stop the paperwork being prepared, the due diligence done and preparations made for completion once the lockdown is over.

One area that does need to be considered is that of the price. The price of a law firm pre-virus and post-virus may differ. It will depend on the sector the particular firm is in and how well it has managed the crisis.

So don’t rule out the possibility of some opportunistic merging and be ready to move as soon as we return to whatever the new normality looks like.