DealLawyers.com Blog

I’ve previously blogged about the rather dismal conditions in the M&A marketplace, but despite the challenging environment, some deals are getting done.  This recent Bloomberg Law analysis reviews the state of the M&A market. While most categories of deals are way down – and mega deals have fallen off a cliff –  purchases of additional stakes and management buyouts are up:

The data indicate that existing shareholders may be throwing lifelines by way of equity injections into ailing companies, and some management may be trying to rescue them outright (all while also taking advantage of low stock prices). Both additional stake purchases and management buyouts, by volume, are up compared to the same period last year.

To date, $4.2 billion in pending and completed management buyouts have been announced this year, compared with $2.4 billion in the same period last year. Announced pending and completed additional stake purchases this year total $141 billion and are up only slightly from last year’s volume of $136 billion during the same period. But, given the current low total global M&A deal volume, this amount now represents a larger portion of the market—roughly 17% of all M&A activity.

One finding that’s perhaps a little surprising is that although the number of distressed deals is higher than last year, there hasn’t been a flood of them – at least not yet.  The article also discusses the growth in pandemic MAE exclusions, and highlights the continuing rise of provisions permitting execution by electronic signature, which likely are receiving a boost from the fact that so many dealmakers are working remotely during the pandemic.

– John Jenkins