Mergers and acquisitions (M&A) activity has dropped significantly this year, and companies have begun to revisit already agreed deals more often amid the coronavirus pandemic, which is changing the business environment and complicating the due diligence process.
American companies canceled 82 deals totaling $ 111.2 billion this year, Dealogic data showed. During the same period a year earlier, 58 already agreed transactions worth $ 50.4 billion were canceled.
Since the beginning of the year, 5,501 thousand M&A transactions totaling $ 639 billion have been concluded in the United States, a year earlier – 7,035 thousand transactions worth $ 1.24 trillion.
More and more companies are thinking about how appropriate previously agreed deals are in the crisis caused by the coronavirus pandemic, said Duncan Smithson, director of mergers and acquisitions at Willis Towers Watson Plc. “We could be in for some nasty surprises,” Smithson said, noting the shift in consumer preferences during the pandemic.
Earlier this week, French luxury goods maker LVMH Moet Hennessy Louis Vuitton SE reportedly backed out of its November 2019 deal to acquire US Tiffany & Co. for $ 16.2 billion
In May, the American investment fund Sycamore Partners canceled its acquisition of L Brands Inc. lingerie chain Victoria's Secret, and Carlyle Group Inc. and the Singaporean state investment fund GIC Pte. Ltd. – from the purchase of a stake in American Express (NYSE: AXP) Global Business Travel.