Suggested Reading:
The International Valuation Standards Council’s (“IVSC”)^ Technical Boards issued a special letter in March 2020 providing guidance on conducting valuation under uncertain times, given the impact of Covid-19 on businesses and in particular on valuations.
While we are still in the extended Circuit Breaker period, which is anticipated to end on 1 June 2020, businesses and individuals may want to review their respective positions to ensure they are not missing out on the support measures that have been announced by the Singapore Government in the past few months.
Covid-19: Conducting financial due diligence in light of the global pandemic
By: Adrian Cheow, Executive Director & Practice Leader, Deal Advisory 
Mergers and acquisitions (“M&A”) transactions across the world have slowed down significantly as the COVID-19 crisis continues to persist. According to Refinitiv data, global M&A activities plunged 28% in the first quarter to its lowest level since 2016. In the United States, deal activities decreased by 50% in Q1 2020 to $253 billion compared to Q1 2019, driving global volumes down to $698 billion from $964 billion in Q1 2019. Asia deal volumes declined by 17% year-on-year to $142.9 billion^.
Strategic and financial buyers abandoned material deals that were pending, in view of redirecting their focus away from acquisition strategies towards weathering the immediate health of their companies during the COVID-19 crisis. For example, (i) Xerox has recently dropped its $34 billion offer for HP; (ii) SoftBank has terminated its $3 billion tender offer for WeWork shares; and (iii) Boeing suppliers Hexcel and Woodward have called off their pending $6.4 billion merger of equals transaction*.
M&A Opportunities
As the famous adage goes, “In every crisis, while deeply unsettling, contains seeds of opportunity”. The COVID-19 crisis has affected certain industries more profoundly than others (e.g. travel, hospitality, leisure and retail). Distressed companies may seek funding and exit strategies while buyers see opportunity for discounted bargains in these sectors. Conversely, companies in the healthcare and technology sectors may benefit from the crisis, thus attracting new rounds of interested buyers and sellers. As a result, upticks in M&A activities may be observed going forward.
Given these opportunities, how can strategic and financial buyers accurately measure values and potential risks going forward?
Download Covid-19: Conducting financial due diligence in light of the global pandemic:
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Notes:
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