There’s never 100% certainty in M&A and other deals, but in the final months of 2020, it’s clear this year is like no other — including the upcoming US presidential election. No matter what polls say, we won’t officially know which administration will occupy the White House until at least the night of Nov. 3 and quite possibly later. For dealmakers, that lack of predictability — on top of the COVID-19 pandemic and economic recession — creates a more challenging M&A environment, but also one with opportunities.
To gain more insight, PwC recently hosted a virtual client event focused on the election and its implications for M&A and other deals. David Axelrod, a CNN political commentator and former advisor to President Barack Obama, joined a discussion of the current electoral landscape, potential outcomes in November and major policy areas that will be in play in the months ahead – no matter who’s president and which party controls Congress.
What executives, investors and dealmakers need to know to address tomorrow’s deal dynamics, featuring David Axelrod.
Listening to David, I noticed a few key issues that could influence the deals landscape in 2021 and beyond:
The health crisis and recession curbed deal activity earlier this year, but we’ve started to see a recovery in multiple areas. In the October PwC Pulse Survey, more than 60% of executives said their companies likely will pursue an acquisition within the next 12 months. While deals overall have been smaller, megadeals — transactions of at least $5 billion in value — are happening in tech, pharma, retail and energy. Companies also are placing bets in other sectors, whether it’s a multinational food conglomerate acquiring a biotech company or a fitness wear company buying a startup that makes tech-enabled mirrors that allow people to join live fitness classes.
All eyes are understandably on the Nov. 3 election, and the presidential path that voters choose will have a major impact on some aspects of the business environment. Dealmakers who understand the above issues, use tools to help reduce risk – such as earnouts – and prepare for different scenarios will be in a stronger position to pursue transactions that deliver value.
Political consultant and analyst David Axelrod and PwC's US Deals Leader Colin Wittmer discuss the economy, green energy, and Environmental, Social, and Corporate Governance (ESG).