“Deal activity is definitely on the rise, which is pleasing, as this is against a backdrop of the lowest half yearly total deal values since 2013. Activity is being driven by a number of factors including low interest rates, the levels of corporate cash available, and private capital – it’s being reported that there’s approximately $1.5 trillion globally available in private equity funds for acquisition and investment (dry powder). And of course there will be increasing opportunities to invest in distressed businesses.
“When it comes to working with your legal advisor on M&A, engaging early is key, particularly under current circumstances. From a private equity point of view, a good lawyer will work with management teams or with investors, advising on strategic matters and structuring, in addition to negotiating the legal documents. There are lots of ‘buy and build’ opportunities out there at the moment and getting your documentation and approach ready early to target companies quickly and efficiently is critical for success. This is where your lawyer can really add value.
“The pandemic has hit some sectors particularly hard, such as leisure, tourism and hospitality. At the moment focus for these businesses is about retaining clients, managing cash flow and ensuring working capital is where it needs to be. It’s going to be tough for a while but challenges create opportunities. Across the board, investors will want to support their portfolio companies, grow them, perhaps reshape or remodel them. In time there will be even more M&A opportunity, but for now it’s about building on what already exists. We are seeing an increasing amount of bolt-on opportunities for our private equity clients, as they look to consolidate companies that come to the market. This is particularly happening in the tech and specialist healthcare sectors.”
“My top tip for an acquirer or anyone thinking about selling their business, is to engage your lawyer early, especially at the moment – legal teams can assist with the organisation ahead of a deal, structuring, and as mentioned above, the strategic approach to transactions. This is in addition to advice from corporate finance.”
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