Akin Gump’s D’Urso and Guttman Author Article for The Deal on M&A Considerations in the Current Environment
The Deal has published the article “Where to From Here? Considerations for M&A in the Current Environment,” written by Akin Gump corporate partners David D’Urso and Elazar Guttman. The article compares the effect on M&A of the COVID-19 pandemic to that of the Global Financial Crisis (GFC), highlighting how the differences could affect the types of deals that will get done.
D’Urso and Guttman write that, “while the root cause and overall impact of the current recession is different from the GFC, and dealmakers — and deal terms — need to adjust to the current environment, we should expect M&A activity to begin picking up well before there is an effective vaccine or treatment if that takes too much longer.” One reason, they say, is that corporate cash and private equity dry powder remain at high levels. They also note that the “attractiveness of PE as an asset class has only increased” since the GFC, credit markets remain unfrozen and there is “ample debt financing available for M&A deals.”
The article then details some hurdles in the way of broad M&A activity. It also discusses some issues of risk allocation that did not exist during the GFC. The authors conclude by noting that even though the pandemic “has significantly reduced M&A activity,” those investors who are more aggressive may find opportunities “if they can address transaction diligence hurdles, bridge valuation gaps and balance executory deal risk.”
To read the article in its entirety, please click here.