Archived Insight | August 7, 2020

M&A Strategy During COVID: Trends We've Seen

Segal's M&A Solutions Leader, Fred Hencke, sees changes and some pauses but not a complete stop of merger and acquisition activity during the COVID-19 pandemic.

In this video, Fred discusses the trends he's seeing, which areas are still showing strong potential and where organizations moving forward should focus to help ensure their success.

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Changes and some pauses

But not a complete stop. Despite the pandemic, mergers and acquisitions aren't stopping. Guy Lester talked to Segal's M&A Solutions Leader, Fred Hencke.


Guy Lester: Are mergers and acquisitions still on the mind of CEOs in the midst of the COVID crisis?

Fred Hencke: Yes, but the motivations are changing. As organizations move from survival mode to business recovery, they are taking stock of what they are learning from this crisis and many are now re-imagining the future.

GL: Talk more about re-imagining the future?

FH: Pre-COVID, they were probably focused on business growth by expanding into new markets or increasing market share. For many, the focus is now on resiliency and finding ways to diversify and deal with market fluctuations, like maximizing current resources and infrastructure, protecting the supply chain, finding new products to sell and improving technology capabilities.

GL: Why will organizations not return to their pre-COVID strategies?

FH: Because of the uncertainties related to the duration of the pandemic, like the economic outlook, re-opening for business, return to work and even the timing of the equity markets are causing organizations to re-think their strategy. However, those organizations that began to digitize their business prior to COVID are seeing much faster recovery, and will look for ways to capitalize on their competitive advantage.

GL: How will they capitalize?

FH: Those organizations with a more mature "digital" business model will seek opportunities to double down and acquire additional markets, talent and technology to accelerate growth. Both technology and technology-enabled organizations will lead the way.

GL: What challenges do you see now in bringing about a successful deal these days?

FH: At the end of the day, it boils down to people, culture and leadership. People in both organizations will need to feel secure, know their role and how it contributes to the success of the deal and will need to be properly equipped. What is important here is that the culture of the combined organization should not be allowed to evolve on its own.

GL: Can you go into that in more detail?

FH: The shared mission, values and goals will need to be well understood.

Leadership plays a key role not only in communicating all of this; they also need to model the attitudes and behaviors necessary to live the mission, demonstrate the values and achieve the goals.

GL: You use the word "behaviors," tell me more about what you mean?

FH: Leaders need to carefully watch their mannerisms and actions. They need to maintain optimism, be fair to both organizations, not fall back to the "old ways of making decisions or running the business," and move quickly to remove obstacles to progress. Above all, any visible actions taken need to match up with what is being communicated: in a sense, the audio needs to match the visual!

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