Our thinking

Global M&A Sentiment Tracker

What's inside

In a world roiled by activism, geopolitical uncertainty and data risk, dealmakers are eager to lean in, according to our survey


If you're like us, you spend a lot of time thinking about where M&A markets are headed. That's particularly true in times of uncertainty when we are eager for any information that can help us understand how forces, such as the coronavirus outbreak, may affect people and markets.

To better understand what dealmakers think about the future, we're launching the White & Case Global M&A Sentiment Tracker. Our first project under this banner is a survey of 800 senior M&A executives from companies operating in a wide variety of sectors around the globe. In early 2020, we also conducted in-depth phone interviews with selected dealmakers.

We did this research before the coronavirus outbreak really took hold, but we believe that most of what we heard from dealmakers in 2019 remains true today, even if timelines for some of their expectations may have shifted.

This collection is our first contribution from the project, and it's focused on four main insights developed from the survey:

It has been incredibly rewarding to think through what we've heard from dealmakers so far, and we're grateful for their contributions. We would be equally grateful to hear any thoughts you may have about this collection or how you'd like to see this project evolve. Please let us know what you think.


In the fourth quarter of 2019, we conducted a survey of 800 dealmakers at companies in the US, Europe and Asia-Pacific. These were senior executives at large companies operating in more than ten sectors. We also conducted phone interviews with selected senior executives, some of whom are quoted in the report.

M&A Sentiment Tracker Methodology

M&A Sentiment Tracker Methodology



Dealmakers plan to lean into a downturn

Half of the executives in our survey expect to do more deals if there’s a downturn in 2020 than if there isn't.


Shareholder activism changes everything

Activism affects virtually everyone now—even those who may never have to deal with an activist.


Trade and national security policies create pent-up demand for cross-border deals

Cross-border M&A remains a high priority—though trade wars and national security rules change the game for some.

Cargo ship

The digital revolution could fuel “shadow protectionism”

Digital drives deals in every sector, ensuring tech is a primary focus of M&A across the board—even as data challenges multiply.


Interactive charts

How do you expect M&A activity to change in your region over the next year?


In your opinion, how likely is an economic downturn within the following timeframes?


In the event of an economic downturn, would you expect to carry out more or fewer deals in 2020?


Is your organization looking to carry out a cross-border transaction over the next twelve months?


Increased protectionism has caused my firm to increasingly focus on domestic deals


Shareholder activism will be a major driver of M&A activity over the next twelve months


Dealmakers plan to lean into a downturn

Half of the executives in our survey expect to do more deals if there's a downturn in 2020 than if there isn't

7 min read

Dealmakers were optimistic heading into 2020. The coronavirus outbreak has changed things, but we believe that most of what we heard from dealmakers in 2019 remains true today, even if timelines for some of their expectations may have shifted. 

Only 35 percent of respondents to our survey said an economic downturn is extremely or very likely within the next six months—the figure rose to 50 percent for within one year and 61 percent for within three years. And 86 percent said they expect M&A activity to increase in their region in 2020, with half of this group saying activity would increase significantly. 

But what stands out most is that 50 percent of dealmakers said they expect to do more deals if there is a downturn in 2020 than if there isn't. The figures are 48 percent for executives at corporates and 59 percent for executives at PE firms. 

In other words, many companies didn't see the overall economic direction in their markets—or globally—as a likely constraint on their ability to pursue M&A in 2020, particularly if valuations come down. 

These expectations may have changed in light of the coronavirus outbreak, which has already taken a significant human toll and had a material effect on the global economy, disrupting businesses and rocking capital markets. In particular, dealmakers may now expect a downturn to materialize sooner than they did at the end of last year. 

But do dealmakers still expect to lean into a downturn if it is precipitated by the coronavirus? We don't have data on that, but we think it's quite possible that they would lean in, although probably not right away. Dealmakers are likely to pull back at first, waiting for some clarity about the scope and duration of the outbreak. But the underlying factors that would drive dealmaking should endure one way or another—which suggests that any lull in M&A would be followed by a surge once we have a better understanding of how the outbreak is likely to play out (see the sidebar "How the coronavirus could affect M&A" for more details). 

What are the underlying factors that would enable and motivate dealmakers to lean in? When asked to rank the top-three drivers of M&A over the next year, dealmakers put "a healthy financing environment" at the top of the list, followed by "the need to acquire a new technology" and "the need to enter a new market or sector." These are factors that are usually called out as primary drivers in growth markets. 

Indeed, 66 percent said they expect financing options to get better over the next year. It seems lenders are eager to get off the sidelines after a slower 2019, and lending is expected to pick up in 2020 (it has already picked up significantly in the UK). This view applies across various debt financing types, including leveraged and corporate bank finance, direct institutional lending and debt capital markets. 

Moreover, for strategic buyers, a downturn isn't likely to diminish longstanding M&A imperatives, such as the need to acquire tech or enter new markets or sectors. And PE firms are knee-deep in dry powder— having ended 2019 with a record US$1.5 trillion on hand, according to Preqin—and may be particularly eager to act if valuations drop. 

50 percent of dealmakers said they expect to do more deals if there is a downturn in 2020 than if there isn’t


Financing should hold up

We remember dealmakers saying they expected to lean in prior to the last downturn only to pull back dramatically when the so-called music stopped. From the high of 2007 to the low of 2009, global M&A value dropped by more than 50 percent to US$1.7 trillion.

But the last downturn was the most severe recession of the post-war era. And it was driven by a credit crisis that led to a severe retraction in the availability of financing for M&A. Banks all but stopped lending and appetite for corporate debt virtually vanished. 

The next downturn is not likely to be nearly as severe as the last one, and a number of factors suggest that access to financing could hold up when it hits. Two factors stand out: 

  • Banks are better prepared this time around. Regulations implemented in the wake of the last downturn require large banks to hold more capital in reserve against the possibility of a crisis. And many are subject to stress tests that help ensure they are able to weather a recession. This suggests banks will be more likely to continue lending throughout a downturn, even if they become more selective and ramp up due diligence standards. Credit markets understand the cash flows in certain sectors, such as healthcare and infrastructure, very well, and these sectors may be more likely than others to have access to financing in a recession. 
  • Alt capital providers have significantly expanded credit pools. The rise of alternative capital providers and direct lenders has significantly increased the availability of financing for M&A since the last downturn, particularly for PE firms. These players are subject to fewer regulations than traditional banks; they tend to hold the debt they issue (as opposed to selling it, as traditional banks typically do); and they are often skilled in dealing with distressed situations, which are more common in a downturn. Moreover, many have significant dry powder they're eager to deploy. Some could be hit hard by a downturn, but many are likely to continue lending throughout (although it's worth noting that most have yet to be tested by a recession, so there's little precedent for predicting how they may react). 


Yet attitudes can turn on a dime

A lot depends on how equity capital markets hold up, particularly because market capitalization is so important in determining company valuations. If M&A remains robust during the next downturn, it would seem that lower valuations will be an important factor. 

Assuming valuations do come down, there's still the problem of matching buyers with sellers, which often proves more complicated than expected. Buyers, especially flush PE firms, will be eager to buy—but sellers aren't always so eager to sell at lower prices. They may try to hold out in hope that valuations recover. And even buyers sometimes hold out, hoping valuations will fall even further before taking the plunge. 

It can take six months for dealmakers to adjust to the new normal and get comfortable enough to return to the deal table. In the meantime, M&A activity can fall off significantly.  

Of course, the dynamics are different in distressed situations. Some companies are hit so hard by a downturn that they have no option but to sell. In such cases, those with experience buying distressed companies will have huge advantages.

Then there’s the tendency toward optimism among dealmakers, which may sometimes skew expectations positive. But when facts on the ground change significantly, pragmatic executives change course.

The coronavirus is now posing the biggest challenge to dealmakers’ expectations in 2020, but we still expect to see a robust M&A market once the world has a better understanding of what the outbreak’s trajectory is likely to be.

How the coronavirus could affect M&A

Expect deal flows to slow down due to capital market volatility and impact on financing, as well as the practical issues related to travel and face-to-face negotiations. In deal agreements, we may also see "pandemic" added to "war, terrorism and revolution" provisions in material adverse effect and force majeure clauses (see our recent alert "Suspending contractual performance in response to the coronavirus outbreak" for details).

Consider what has happened in China, where the outbreak started. The number of M&A deals involving Chinese companies has tumbled as bankers were barred from travel and encouraged to avoid face-to-face negotiations for fear of spreading the disease. And the outbreak has also prompted some buyers to hold off on acquisitions in the hope of snapping up assets at a lower price later. According to Dealogic data, the number of M&A deals involving Chinese companies from January 1 to February 11 fell by a third compared to the same period in 2019, with total deal value down almost 70 percent.

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