M&A: Maintaining activity levels in an uncertain environment

Activity:

Norgestion has acted as advisors on 18 completed transactions in 2020 for M&A and Capital Markets.Reflecting on 2020, with many uncertainties regarding the evolution of the pandemic still unresolved, we have seen a significant reduction in the number of transactions in 2020 compared to 2019. The statistics vary by sector, but overall they show a decline. M&A activity tends to reflect a businesses situation at any given time and are typically based on three drivers: Liquidity, interest rates and the economic situation. Despite the significant availability of liquidity in the market and low interest rates, uncertainty has still slowed down the decision making. However, although we cant predict a trend, we see that the last quarter of 2020 has shown greater dynamism.

A Double Reality:

At the investor level, a double reality is obvious. There are a number of sectors that have been highlighted as “resilient”, in which growth forecasts are being maintained (renewable energy, digitalisation, sustainability, health and food…) these markets are dominated by sellers.However, in those businesses surrounded by uncertainty, aggressive buyers take advantages of the opportunities.

Advisory Activity References:

In 2020 Norgestion acted as advisors in 18 transactions of which 35% were cross-border.Regarding the valuations, we observe that the evolution is not homogeneous by sector. We see an increase in health, digitalisation and sustainability. The other sectors are stabilizing or even decreasing.

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