Global law firm White & Case LLP has today released the results of its US M&A Sentiment Tracker, a survey of 250 senior M&A executives in more than ten sectors conducted in August. The survey shows that, despite the value of US M&A in the second quarter of 2020 dropping lower than in any other quarter on record since 2006, three-quarters of dealmakers surveyed expect M&A activity to rise in the next 12 months—although not to pre-crisis levels.
"High deal value for August shows we are starting to see a rebound in M&A activity that reflects dealmakers' emerging confidence in the US economy after the unprecedented impact of COVID-19," said John Reiss, Global Head of M&A at White & Case. "However, a period of market stability, following the results of the upcoming US presidential election and the uncertainty of a second wave of the virus subsiding, will be required before we see M&A executives fully lean in."
The survey found that a short-term increase in M&A activity will likely be driven by businesses' appetite to survive current market conditions and streamline their portfolios. Three-quarters of surveyed executives indicated that they expect their companies to focus on defensive moves. Specifically, one-third of survey respondents said their companies are focusing on survival and protecting their core businesses, and 23 percent said they are streamlining their business portfolios.
Reiss noted: "M&A executives have had an opportunity to evaluate the pandemic's initial effects on the market. If volatility remains, we will see companies in hard-hit industries focus on defensive moves."
Internationally, the survey found that US dealmakers are most interested in opportunities in the UK and China, with 35 percent of executives identifying the UK as the market where they see the most deal opportunities, and 22 percent selecting China.
The survey also found that 60 percent of executives surveyed believed the stock market was overvalued in August, with more than one-third saying it was overvalued by more than ten percent. Despite this, only 15 percent of executives surveyed said they expect another crash similar to what was experienced in Q1 and Q2.
The full White & Case M&A Sentiment Tracker survey results may be viewed here.
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