Virus dealing a heavy blow to global M&As

The novel coronavirus outbreak dealt a heavy blow to the global mergers and acquisitions, and the worst is yet to come, analysts say.

In the first quarter, global M&A activities were down 35.3 percent by value compared with a year earlier, the biggest quarterly fall in seven years, according to law firm Freshfields Bruckhaus Deringer.

“We are in a time of crisis, and it can be just the beginning as the pandemic will have broader implications,” said Rob Ashworth, a partner with the firm.

The effects will include how antitrust authorities are responding, how governments are looking to protect domestic businesses from foreign acquirers and how deal terms are adapting to heightened market risks.

Wang Qing, a partner with the firm, said some sectors, such as pharmaceuticals, health care and hygiene, may see better exposure in the near future but immediate challenges such as travel restrictions will curb the execution of deals.

“Corporate boards need to consider the entire playing field during times of extreme market and economic volatility,” Wang said.