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CMS European Outlook 2020

Who dares wins: European M&A 2020

September 2020

Beneath a veneer of negativity, deal activity in Europe has a strong foundation going into the closing months of 2020.
Scott Moeller, Professor and Director, M&A Research Centre of The Business School, City, University of London

We are pleased to provide you with this year’s edition of the “European M&A Outlook”, published in co-operation with Mergermarket

Our survey provides key insights into how both corporate and private equity firms are adapting their M&A strategies to the current situation in Europe and how they are looking beyond the continent to tap into new geographic, product and customer markets. The report canvassed the opinions of 230 Europe-based executives, from corporates and private equity firms, assessing dealmaking sentiment for the European M&A market in the year ahead.

The COVID-19 pandemic has taken a heavy toll on European dealmaking activity. According to Mergermarket data, in H1 2020, European deal volume fell 31% to 2,800 transactions and aggregate value dropped by 29% to EUR 262.9bn compared to the same period in 2019. However, we believe that opportunities remain for those willing to take risks.

Key findings from our research include:

  • M&A appetite weakens. 74% of respondents say the pandemic has caused their dealmaking appetite to lessen. 65% of respondents are not considering M&A, against 45% in last year’s survey. Uncertainty around future company earnings has widened pricing expectations between vendors and buyers. Dealmakers are nervous about paying full multiples for assets at a time of high volatility, while vendors are reluctant to crystallise lower valuations at the bottom of the cycle.
  • Financing conditions to tighten. 79% of respondents expect financing conditions to become more trying in the coming year. Leveraged loan issuance is down year on year and, although corporates have been able to tap high-yield bond markets, lenders are focused on nursing current portfolios through COVID-19 disruption rather than funding new transactions.
  • Distressed M&A, restructuring and corporate defaults to rise. All respondents anticipate an increase in distressed M&A, 90% say there will be an increase in restructuring activity, and 82% expect an increase in corporate defaults. Almost three-quarters of cash-rich private equity firms noted their interest in distressed and turnaround opportunities, signalling that prospects remain for those brave enough to embrace both the challenges and the opportunities found in this period of instability.

Our features in this year’s report include articles on the GP-lead secondary, clean energy, life sciences, and the outlook for European investors active in Latin America. There is also a dedicated analysis of the impact of COVID-19 on European dealmaking.

Please note that our annual CMS European M&A Study will be published in spring 2021 when we will report back on how this market has impacted M&A transaction terms and conditions.

CMS European M&A Outlook 2020


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Helen Rodwell
Managing Partner
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Alexander Rakosi
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