Though the coronavirus pandemic led to a drop in M&A activity, certain sectors such as technology, healthcare and financial services have remained strong. With record amounts or private equity capital ready to deploy, buyers are more cautious, and sellers remain hesitant for fear of selling at near-bottom prices or starting deals they can’t get over the finish line.
In the current landscape there has been an increase in public-to-private transactions by UK listed companies, while many British companies have chosen to raise capital to protect their balance sheets and stabilize working capital and liquidity positions, and a number of new EU regulations and proposals are putting up even more obstacles for companies looking to do deals. On the governance front, ESG continues to be top of mind for investors, but with a shift toward the social issues brought to light during the pandemic. Will the recovery lead to a new set of corporate vulnerabilities centered around how the world has changed and how companies are positioned, and open the door for activists to return to the European markets?
Join The Deal and a roster of senior corporate executives, private equity and institutional investors, and corporate advisers for The Deal Economy UK. This virtual event features two days of online sessions exploring the effects of Covid-19 on dealmaking in Europe and the opportunities, obstacles and risks dealmakers face in the current environment and how to navigate through them. Your registration provides access to all of the sessions. View them live as they happen or on demand at a time that is convenient for you.
Rowena joined 3i in 2007 and is based in London, focusing on originating, executing and representing 3i on the Boards of Private Equity investments. She has been involved in 3i’s investments in Audley Travel, Aspen Pumps and Phibro Animal Health, and the sale of Centrul Medical Unirea to Advent International. Rowena currently sits on the Board of Audley Travel.
It’s not surprising that the impact of the coronavirus pandemic has led to an overall drop in M&A activity, but despite the current economic challenges, certain sectors such as technology, media and telecommunications and financial services have remained strong. Although dealmakers are far more cautious and selective, market sentiment has started to change. Buyers are looking to take advantage of opportunistic acquisitions, and record amounts of private equity capital needs to be deployed. How is transaction volume, deal terms, valuations and pricing being affected by the current market volatility? Will we see an increase in distressed M&A in sectors most affected by Covid-19? What considerations are being used when crafting Material Adverse Effect provisions in light of the global pandemic?
Panelist: Mark Corbidge, Managing Director, Transactions, Sun Capital Partners
Panelist: Rowena Gracey, Director, UK Private Equity, 3i
Panelist: Merrick Mckay, Head of Europe – Private Equity, Private Markets, Aberdeen Standard Investments
Panelist: Tristan Nagler, Managing Director, Aurelius UK
Panelist: Daniel Sinclair, Partner, Ares Management Corporation
In April, the UK Financial Conduct Authority (FCA) announced measures designed to help companies in their efforts to raise capital and position for recovery. As British companies continue to cope with the coronavirus pandemic, many have chosen to raise capital to protect their balance sheets and stabilize working capital and liquidity positions. Has this opened the window for private equity firms looking to deploy capital? PIPE (Private Investment in Public Equities) investments — which are common in the U.S. can also provide an alternative source of funding for companies in need of cash, by allowing private investors to purchase common stock or preferred stock that is convertible to common shares at a predetermined price. This panel will explore the options available for listed companies, and investors and how these fundraising efforts can dilute value for existing shareholders.
Panelist: David Peerless, Director, Boustead Capital Markets
As the financial markets continue to deal with the global pandemic, and volatile valuations across both public and private markets, many companies have been forced to look inward and explore options to stabilize their businesses. The combination of reduced share prices, record-low UK interest rates and private equity sponsors sitting on record levels of capital has shifted the landscape from a pre-covid seller’s market to a buyer’s market and has spurred an uptick in public-to-private activity. This panel will explore the key considerations sponsors should keep in mind as they consider undertaking a public-to-private transaction involving a UK-listed target, including pricing, due diligence, availability of financing, extended timelines, insurance and risk mitigation strategies and regulatory scrutiny.
Panelist: Oliver Haarmann, Founding Partner, Searchlight Capital
Panelist: Matthew Turner, Senior Industry Expert, Triton Partners
In an industry that was already under pressure before the Covid-19 pandemic, retailers across Europe are now dealing with bankruptcies, failed mergers and volatile valuations. An accelerated shift to online shopping and a slowdown in tourism has put renewed scrutiny on the operations of Europe’s largest retailers, and they have been forced to preserve cash and evaluate their liquidity. How is the Commercial Real Estate market being affected by their retail tenant’s inability to pay rent? What industries are integral to supporting the retail sector during the recovery, and how are they contributing to current deal flow? What does the future of retail and M&A in the retail industry look like?
Panelist: Ertan Enginalev, Founder & Managing Partner, WSD Capital Management
Panelist: Cynthia Jamison, Chairman, Tractor Supply Company; Director, Darden, Inc., Office Depot Inc., Big Lots Stores, Inc.
Panelist: Diane Rochereau, Associate Partner, EY-Parthenon
Panelist: Mary Wallace, Retail, Consumer Behaviour & Place Executive, IBM Services
The turmoil around Covid-19 has created opportunities for engaged shareholders as company valuations have tumbled and some management’s inability to deal with crisis have become apparent. ESG continues to be top of mind for investors, but with a shift away from the governance aspects and more toward the social issues brought to light during the pandemic. Activists by nature are opportunistic investors…so why is shareholder activism in Europe down? The recovery will lead to a whole new set of corporate vulnerabilities centered around how the world has changed and how companies are positioned. What are their weaknesses? Are old business models outdated? How did companies fair in comparison to their competitors during the recovery? Perhaps activists are sitting on the sidelines ready to pounce. This panel will explore the changing face of shareholder activism in Europe and discuss what we can expect from activists as they are surely seeing opportunity on the horizon.
Panelist: Michel De Fabiani, Chair of Policy Committee, The European Confederation of Director’s Association; Vice-President, Franco-British Chamber of Commerce & Industry
Panelist: Michael Herskovich, Global Head of Corporate Governance, BNP Paribas Asset Management
Panelist: Till Hufnagel, Partner, Head of Activism, Petrus Advisors
Panelist: Patrick McHugh, Co-Founder and Senior Managing Director, Okapi Partners
Panelist: Eric Sibbern, Senior Partner and Managing Director, Veraison Capital AG
Shareholders and management teams at the world’s largest companies aren’t the only ones invested in sustainable practices to reduce carbon footprints. The earth, an often-overlooked stakeholder in global commerce is perhaps the one with the most to lose in the fight against carbon emissions. How are companies attracting investment and support from shareholders in a shift toward more eco-friendly and sustainable practices? How do companies shift toward carbon-neutral and sustainable practices without severely sacrificing profits? As the recovery continues will we see a renewed emphasis on companies reducing their carbon footprint and promoting environmental sustainability?
Panelist: Anne-Sophie d’Andlau, Managing Partner, Co-Founder, CIAM
Panelist: Gianluca Ferrari, Founding Partner and Chief Investment Officer, Clearway Capital
Panelist: Mauro Roversi, Partner and Chief Investment Officer, Ambienta
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This seminar explores how shareholder activists and the companies they target are shifting gears amid the coronavirus pandemic.