Boards should take a fresh look at their company’s deals strategy

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Mergers, acquisitions and other transactions can be an instrumental element of a company’s strategy to deliver shareholder value, but they should be pursued through a deals strategy that helps the company achieve a strong overall portfolio of businesses. Here’s how boards can help their companies develop and leverage that strategy in a challenging environment.

The COVID-19 crisis will have lasting impacts on many aspects of people’s lives, even after a vaccine is developed. The combination of a global virus outbreak and a self-imposed shutdown in many parts of the economy is significantly different from previous recessions and societal shocks. The Great Recession in 2007-2009, for example, had major financial and economic implications for individuals and businesses, but its enduring effects were mostly regulatory, with few big changes in how people live and work.

While the economy has been upended, a majority of companies aren’t changing their M&A strategy as a result of the crisis. Deal activity has declined so far in 2020, but many companies are in position to consider acquisitions during the downturn. One big reason is the unprecedented amount of capital that was available for M&A and other investments before the pandemic; cash on corporate balance sheets and private equity dry powder are high, and borrowing interest rates have been low. And now the pool of potential sellers could grow as valuations drop from the highs of recent years. 

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Paula Loop

Governance Insights Center Leader, PwC US

Patrick Gordon

Principal, Private Equity Value Creation Leader, PwC US

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