Dealmaking thrives in an environment of predictability and certainty.

Looking ahead, there are a number of market fundamentals that suggest promising conditions for continued deal activity in 2020, including the healthy balance sheets of corporations, the significant deployable cash reserves of private equity firms, the rise in M&A-focused shareholder activism, and the availability of low-cost capital.

While these fundamentals give optimists reason to believe in another year of robust M&A activity, anxieties associated with the spread of COVID -19 and its anticipated impact on M&A, the uncertainty surrounding the U.S. presidential election, and the reality that key markets may now be near the end of their economic cycles, could dampen deal volume and deal values to a substantial degree over the balance of this year.

Over the months to come, market participants, whether optimistic or anxious at the outset of 2020, will closely follow the strength of the overall economy as well as consumer confidence as important drivers for M&A.


"Market conditions suggest that 2020 will be another busy year for transactional activity, but the impact of COVID-19 and the results of the U.S. presidential election introduce elements of significant uncertainty that could erode the momentum for dealmaking."

William J. Curtin, III
Hogan Lovells Global
Head of M&A

Low cost capital and available cash

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Low cost capital and available cash

Private equity firms, fortified by record levels of deployable capital and ready access to debt financing, are expected to remain active participants in M&A transactions during 2020. U.S. strategic acquirers are also well-placed for dealmaking, with an estimated US$1.55tn at hand on balance sheets at the outset of this year. The prevalence of low interest rate markets should continue to facilitate an attractive financing environment for dealmakers. These cash and financing fundamentals should enable sponsors and strategics to implement non-organic growth strategies in the pursuit of expedited technological advancements.

Shifting geopolitical currents

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Shifting geopolitical currents

As we begin 2020, the success of the Conservatives in the UK elections established greater clarity for Brexit, while China and the United States reached a Phase 1 agreement over trade conflicts. These developments should promote more robust cross-border transaction activity, as Boris Johnson’s decisive victory brings a sense of stability in the UK, and Chinese companies prepare for the next wave of global expansion by focusing on the infrastructure and manufacturing sectors through pursuit of the PRC’s Belt and Road Initiative. In the face of these significant global political and economic developments, uncertainty stemming from whether a progressive or more moderate nominee will emerge from the Democratic National Convention in July, and its potential to impact the results of the ensuing U.S. presidential election, could adversely impact deal activity this year.

Shareholder activism

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Shareholder activism

The influence of shareholder activism is likely to shape deal activity again in 2020. Shareholders feel increasingly empowered, as they drive deals and persuade boards to explore M&A as a strategic priority, oppose board-backed transactions perceived by activists as overpriced or misguided, and hold boards and management accountable for return on investments. Activist involvement in dealmaking is expected to continue to rise, through efforts to promote various M&A initiatives, including company sales, selective divestitures, and public opposition to questionable transactions.

Rising European M&A

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Rising European M&A

European companies are increasingly looking beyond Europe for business opportunities. This macro development is expected to increase given the technological evolution that continues to challenge traditional business models, the significant number of high-value technology assets located outside of Europe, and the low organic growth rate for member states within Europe as projected by the European Commission. In parallel, U.S. and Asian buyers should have opportunities to capitalize on their currency strength through investments in Europe.


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At the start of 2020, the full extent and impact of coronavirus remains unknown; however, global stock markets have already experienced significant volatility. Some participants in M&A transactions are examining the possibility of triggering “Material Adverse Change” clauses to impede the completion of, or at least to trigger a renegotiation of terms for, previously announced transactions; other participants are considering deferring M&A activity altogether. Activity in the consumer and diversified industrials sectors, and companies heavily relying on supply chains in China and Southeast Asia, are the most vulnerable to the detrimental consequences of the epidemic – with other sectors at risk if coronavirus swells to pandemic status.

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M&A Year in Review

M&A Year in Review | 2019

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