Companies just did $1 trillion in deals despite the pandemic. Here's why
More than six months into the global pandemic, the world is still plagued with uncertainty about the trajectory of the Covid-19 virus. But that's not stopping businesses from plowing ahead with an unprecedented number of big mergers and acquisitions.
The numbers: Thirty-seven deals worth $5 billion or more, totaling $496 billion, were announced between July and September, according to data from Refinitiv. By both deal count and deal value, that's the best third quarter since records began in the 1970s. Including smaller deals, the total value was above $1 trillion.
September was by far the busiest month of the period, logging a 107% increase over the same month in 2019.
In the spring, dealmaking slowed as nervous boards took steps to conserve cash and shore up their balance sheets. As initial lockdowns ended over the summer, however, companies grew more assured about where they stood, Guillermo Baygual, co-head of M&A for Europe, the Middle East and Africa at JPMorgan Chase, told me.
"Management boards are seeing a level of activity which can give them confidence as to where they are going to land," Baygual said.
That's allowed them to start making strategic plays to position themselves for the next economic cycle.
"Companies feel there is going to be limited growth in the coming period, and a number of their weaknesses have been exposed," Baygual said. This is encouraging a wave of consolidation in industries like banking, telecommunications and energy. Read More