The Effect of Coronavirus on Mergers and Acquisition

Abstract:

The COVID-19 crisis is extraordinary in both its humanitarian and economic impact, but history suggests how M&A will play out. While the M&A market has contracted, companies that are making M&A moves typically outperform those that do not. Forward-thinking leaders need to act now to rebalance for risk and liquidity, while assessing opportunities for resilience  and growth coming out of the downturn. The Coronavirus crisis has shaken all aspects of human life from their physical well-being to financial stability. These last 9 months since march has been very crucial for conglomerates and SMEs alike. The demand for consumer goods dropped severely triggering solvency challenges among business owners, the non-performing assets of banks sharply rose due to bad living conditions affecting the overall interest rates, and demand for oil fell significantly causing trouble with OPEC supply. We have recovered from economic crises and pandemics earlier as well but the consequences of Covid are still unfolding every day. Businesses are facing the dilemma of uncertainty in the economy, which right now is, more than ever. The consequences are also majorly felt in the Mergers and Acquisitions industry (M&A) as expansion potential is underpowered by the right to life. Companies are prioritizing investing in the well-being of their employees and adjusting to the new way of life than acquiring a new business.

Authored by Devang Bhatia, Guru Gobind Singh Indraprastha University.