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That level of uncertainty is not something I’ve experienced in downturns over my career
Ian Mant, Fasken LLP
The pandemic, and a general sense of societal change, is leading to a lot of difficulty getting deals done.
“That level of uncertainty is not something I’ve experienced in downturns over my career. I just think it complicates things a little bit further,” said Mant.
“On the sell side, it takes a while for there to be an adjustment down to the new reality, and on the buy side, you know, they don’t want to overpay.”
At the same time, several people who spoke to the Financial Post said that the amount of unspent capital sitting on the sidelines is likely to drive activity soon.
“Yes, there’s been a dropoff overall in M&A volume this year. That being said, in the last few months there has been pickup in activity,” said John Cho, a partner at management consultancy KPMG, and head of deal advisory for Canada.
“There is a lot of capital still looking to be deployed. There’s $2 trillion of institutional money — so private equity, pension plans, sovereign wealth funds — approximately, $2 trillion of dry powder looking to be deployed.”
Cho said he doesn’t expect that M&A activity will fully recover until there’s more certainty about the pandemic, and the economic future. However, there could be a lot of “opportunistic buying” in the coming months, especially in sectors of the economy hard hit by the pandemic, such as retail, travel, entertainment and restaurants.