M&A Lessons from the COVID Crisis

When the COVID-19 pandemic practically shut down global business in March 2020, the M&A world was thrown into a tailspin. Unsigned pending deals were put on hold, in many cases indefinitely. Xerox dropped its $30 billion hostile bid for HP, citing the global health crisis and resulting macroeconomic and market turmoil. Buyers who had signed agreements reconsidered their transactions and sought creative – and often aggressive – ways to renegotiate terms or to exit their deals completely. In the first half of 2020, M&A deals in the United States valued at over $100 billion were terminated, with pandemic-related turmoil frequently cited as a significant factor, and deals valued at billions of dollars more were challenged by buyers who were no longer as enthusiastic about the terms that had been struck pre-pandemic.i In place of strategic transactions, corporations focused on stabilizing operations, protecting employees and shoring up liquidity. Global uncertainty, stay-at-home orders, nervous credit markets and rapidly changing industry conditions served as speed bumps to deal-making, if not absolute barriers. While deal volume made a very strong and perhaps surprising comeback in the second half of the year, 2020 will be remembered as the year of the pandemic, and many lessons will be learned.