Who’s acquiring & what are they looking for?

The unprecedented economic and societal upheaval caused by the global Coronavirus pandemic resulted in many deals slowing down or being postponed in the first half of the year. M&A processes were impacted as site visits and face-to-face due diligence meetings were cancelled.

There were clearly sectors less severely impacted by the disruption – for example, deal making across the technology sector remained stable over the period, with Mergermarket reporting only a 1.8% drop in global technology transactions in Q1 2020 compared to the year before, against a backdrop which saw global deal value fall by 39%.

However, businesses across a wide range of sectors have had to adapt to a new sense of “normal”. With this transition, an increasing number of company decision makers are considering strategic acquisitions as a means of future-proofing their organisations.

Such acquisitive growth may be driven by the need to move into a new market, a desire to strengthen an existing competitive position, an intent to strengthen the capital and cost base of the business, and/or a move to up-skill in order to deepen operational expertise (often referred to as an “acqui-hire”).

As the UK economy moves out of the first phase of the Coronavirus emergency, there are several sectors that will provide opportunities for growth via M&A:

• With many traditional retailers having to pivot towards online sales, businesses providing the relevant technology platforms, distribution facilities, robotics and product delivery mechanisms will naturally become attractive acquisition targets
• Healthcare businesses will also attract interest from acquirers seeking to take advantage of the increased demand for tele-health and related remote services
• By extension of the healthcare ecosystem, during the lock-down period we’ve witnessed sustained M&A activity in the healthcare SaaS and medical devices markets, and we expect this activity to continue
• The world of technology will continue to offer acquisitive opportunities – with office-based organisations likely to continue with remote working, tech companies that facilitate this both in terms of hard and software applications, will attract interest
• Other sectors that we expect to see acquisitive interest include food, consulting, commercial real estate and infrastructure engineering

If you’re developing an acquisition strategy and would like to hear more about how we can help to develop your plans, please get in touch.