Analysing the impact of COVID-19 on M&A deal activity and its longterm implications for individual sectors and the economy as a whole

Abstract

A typical crisis includes three stages: respond, where a firm must maintain operations; recover, where it must gain knowledge and grow stronger; and flourish, where it must get ready for the new normal circumstances. Globally, businesses launched a massive shift in strategy to adapt to and recover from the pandemic circumstances, and mergers and acquisitions were crucial to this process. In fact, companies and PEs splurged an extraordinary $5 trillion on M&A in 2021, the largest amount of investment ever noted, under the most difficult circumstances. The worldwide environment following the epidemic appears to be very different from earlier times. The developing hardship & adversity and the conflict in Ukraine have fundamentally disrupted the geopolitical balance, which may have an impact on the world's economy, trade routes, supply chain networks, and the shift toward green energy. Under an economy of growing global inflation, interest rates, supply chain reconfiguration, higher regulatory impediments, and resurgent forward-looking challenges, corporate executives should adjust their companies for these systemic and structural changes. They should prepare for increased public oversight with respect to corporate environmental, social, and governance (ESG) obligations and investor demands brought about by this change in order to earn profits with a motive. M&A strategies are increasingly being established as an essential tool in the company toolbox, used both on attack and defense to achieve transformational development. In order to help businesses secure their gains, speed up transformation, and seize market leadership, we predict a novel blend of defensive and aggressive M&A tactics will develop. Parallel to this, multi-sector synergies are being fuelled by technology-driven innovation, creating rare chances to establish new firms and market niches. These factors have made it necessary to broaden conventional M&A strategies to incorporate cooperative organisations like JVs, strategic partnerships, and ecosystem collaborations that are not constrained by industry borders and instead concentrate on shared objectives and beliefs. The skill to mix endurance and transformational development with corporate sustainability and trust will probably be the defining characteristics of success as business executives set their companies up to adjust and prosper in the new era.