COVID’s not gone, nor forgotten
When this survey was taken in late September, the spike in infections due to the Delta variant was still significant. While that has waned, COVID and its aftermath remain a concern. At the time of the survey, 94% of respondents expected COVID to have a negative impact on deal activity.
“Absent something unexpected, and COVID has certainly surprised us before, I think we’re moving beyond concern about the disease itself,” says Ferreira. “Our private equity respondents are bit more optimistic, with 73% of PE responses indicating that they expect somewhat or no disruption on deal making from COVID cases in the U.S., while approximately half of the our M&A corporate clients expect deal making will be negatively impacted over the same period. But businesses are certainly still dealing with the aftermath of the pandemic. Labor shortages, supply chain issues, those are very significant concerns.”
Burgess agrees. “Supply chain issues are huge. Sellers want to forecast what their results will be when they get their supply chains sorted out, but buyers aren’t taking that on faith, so they are a major driver for earnouts right now.”
On the plus side, with borders opening up, cross-border deals are increasing too. Almost two-thirds (65%) of respondents expect an uptick in cross-border deal activity.