COVID-19 Impact on Corporate M&A Market - advisory.kpmg.us€¦ · © 2020 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent

© 2020 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. [Printed in the U.S.]

Corporate Development / M&A Professional Survey

June 2020

COVID-19 Impact on Corporate M&A Market


2

CONTEXT

Survey objectives and stakeholders

KPMG surveyed ~150 senior US Corporate Development professionals across a mix of companies:

§ Medium to large companies

§ Publicly-listed vs. privately-held

§ Industries / sectors

§ Companies actively seeking M&A

kpmg

The June 2020 survey focused on assessing various impacts of COVID-19 on corporate deal activity, including:

§ Focus for M&A activity

§ Types of assets being pursued

§ Timeline for M&A pursuits

§ Expectations for “game-changing” deals

CORPORATE DEVELOPMENT / M&A PROFESSIONAL SURVEY


3

Sources: Corporate Development Professional Survey

EXECUTIVE SUMMARY

Headline messages

§ 60% of respondents say that reduced expectations from Wall Street resulting from COVID-19 has given them “cover” to make investment, with >50% of these saying they are planning to make acquisitions

§ 30% of respondents say that “now is the time to buy” and another 40% say that “it’s a good time to prepare to act”

§ Almost 50% of respondents are currently actively pursuing M&A, with almost 90% of these companies seeking smaller acquisitions / bolt-ons and almost 33% seeking larger acquisitions

§ Over 70% of respondents are seeking stronger performing assets, while only 33% are seeking more distressed assets

§ Over 60% of respondents say that a “game-changing” transaction in their industry is likely within the next two years, almost 40% within the next year

§ From an industry perspective:

- Roughly one-third of TMT respondents are actively pursuing M&A currently and almost two-thirds expect a “game changing” deal in the industry in the next 12 months

- Over half of Healthcare respondents are actively pursuing M&A currently and over 80% expect a “game changing” transaction in the industry in the next 12 months

- ~80% of Industrials respondents are planning to make M&A investments but only 50% have changed their M&A rationale as a result of COVID

- Only 33% of Finance respondents are planning to make M&A investments as a result of COVID and roughly half of are seeking poorly performing or distressed assets

- ~75% of Consumer respondents expect a “game-changing” transaction in the industry in the next year and almost 75% have changed their M&A rationale as a result of COVID


4

RESPONDENT PROFILE

The survey included a diverse pool of respondents across industries, roles, and company types and sizes

21%

19%

11%

11%

9%

7%

7%

5%

3%

3%

5%

Manufacturing

Healthcare, Life Sciences & Pharma

Technology / Telecom / Media

Finance & Insurance (non-private equity)

Consumer & Retail

Industrials

Construction & Infrastructure

Business / Professional Services

Aerospace & Defense

Energy & Power

Other

BU Head / General

Management

C-Suite

33%

VP Director Manager

41%

7% 5%2%

SVP / EVP

12%

80% 16%1%

3%

Publicly listedcompany

OtherPrivately heldcompany

PE backedcompany

100%

9%

41%

13%

26%

11%

$500M - $999M

> $50B

$1B - $4.9B

$10B - $50B

$5B - $9.9B

Note(s): N-counts refer to number of respondents unless otherwise noted. N-counts on charts may vary due to survey logic or exclusion of certain response categoriesSources: Corporate Development Professional Survey

Which of the below best describes the industry in which you currently work?N = 152

Which of the below describes the type of company for which you currently work?N = 152

What is the approximate annual revenue of the company for which you currently work?N = 152

Which of the following best describes your job title?N = 152


5

IMPACT OF COVID-19

~80% of respondents noted negative financial impacts from COVID, with consumer and $5-10B companies reporting the most significant impact…

N =

N =

By Company Size

By Industry(Top responses only)


How has your company been impacted financially by the COVID-19 pandemic?N = 152

30%

51%

6%

7%

6%

No impact

Modestnegative impact

100%

Significant negative impact

Modest positive impact

Significantpositive impact

25% 21% 29%13%

50%

59% 59%54%

56%

19%

9% 10%

19%

8% 13% 19%3% 3%


4%3%


4%

Industrials / Manufacturing

32

0%

Finance & Insurance

6%6%

Consumer& Retail

29 24 16 16

7%

14%27%

60%

33%13%

57%53%

40%

40% 75%

21% 13%10% 13%

0%0%14

$10B - $50B$500M - $999M

7% 0% 5%40

5%6%

$1B - $4.9B

0%

$5B - $9.9B

0%0%

16

> $50B

62 20

8%

§ 44% are actively looking for deals currently§ 56% have changed their M&A rationale as a

result of COVID-19

§ 70% are actively looking for deals currently§ 56% have not changed their M&A rationale as

a result of COVID-19


6

IMPACT OF COVID-19

… and private, especially PE backed (small sample size), companies reporting more negative impacts

30%

51%

6%

7%

6%

Modest positive impact

Significant negative impact

Modestnegative impact

No impact

Significantpositive impact

100%

31% 25% 20%

48% 63% 80%

7%7% 8%

0%

Privately held company

7% 0%4%

Publicly listed company

0% 0%

Private equity backed company

121 24 5

By Company Type

28% 32%

56% 46%

7%7%

9%6%

6%

NoYes

3%71 81

By Active M&A Opportunity Pursuit

N =

N =


How has your company been impacted financially by the COVID-19 pandemic?N = 152


7

COMPANY PRIORITIES FOR NEXT 12 MONTHS

Organic growth, cash management, and cost take-out cited as near-term priorities, with more organic growth in healthcare (31%) and cost take-out in consumer (29%)…

13%

Organic growth

Inorganic growth / M&A

Liquidity / cashmanagement

Cost take-out

23%

Forming strategic alliances / partnerships

Divesting parts of the business

Takeover / activism defense

21%

20%

15%

6%

1%

N (responses) =

N (responses) =


By Company Size

9%11% 15% 13%

8%

17% 17%14%

17%19% 17%

13%

21%

10%

20% 16%

20%

17%

29%

26% 31%

24%

23%

24%

19% 20%

0% 6% 0% 2%Technology /

Telecom / Media

4%4%


8%


0%

49

Finance & Insurance

6%

Consumer& Retail

88 81 80 53

10% 10%23%

14%12%

12% 13%

18%

14%

25%15% 20%

18%

20%

22%

19% 20%

25%

24%

22%

20% 13%

22% 23% 27%

$5B - $9.9B1%0% 0%

$500M - $999M

7%

$10B - $50B

5%

125

$1B - $4.9B

3% 4%2%> $50B

40 177 68 45

8% 9%


For the next 6-12 months, what are the focus areas for your company? (multiple selections allowed)N = 151

§ 11% plan to make M&A investments§ 19% have not changed their M&A rationale as a

result of COVID-19

§ 14% are actively looking for M&A deals currently§ 18% expect a "game-changing" transaction in the

next 6 months resulting from COVID-19 related distress


8

COMPANY PRIORITIES FOR NEXT 12 MONTHS

…however, there is little variation by company types

Forming strategic alliances / partnerships

Inorganic growth / M&A

Organic growth

Takeover / activism defense

Cost take-out

Liquidity / cashmanagement

20%

Divesting parts of the business

23%

21%

15%

13%

6%

1%

7%14% 19%12%

15%14%16%

24% 19%20%

19% 24%21%

24% 19%23%

0%Privately held

company

2%


4%0%Private equity

backed company

5%

353 72 21

18%7%

14%

17%

19%21%

20%22%

20% 26%

6%2%

231

Yes No

6%

224

1%

By Company Type


N (responses) =

N (responses) =


For the next 6-12 months, what are the focus areas for your company? (multiple selections allowed)N = 151


9

WALL STREET EARNINGS EXPECTATIONS

60% plan for investment due to lower Wall Street earnings expectations, with M&A cited more in industrials (80%), companies $500M-$1B (71%) and $10-50B (65%)…

60%

37%

2%

No

Yes

Other

100%

54%

46%Planning to make

non-M&A investments

Planning to make M&A related investments

100%

45%56%

80%

33% 40%

55%44%

20%

67% 60%


Finance & Insurance



Consumer& Retail

101611 9 10

71%

48% 55%65%

17%

29%

52% 45%35%

83%

$5B - $9.9B$500M - $999M

11

$1B - $4.9B

7

> $50B$10B - $50B

27 23 6

N =

N =


By Company Size

Note(s): N-counts refer to number of respondents unless otherwise noted. N-counts on charts may vary due to survey logic or exclusion of certain response categories


Has a Covid-19 related reduction in Wall Street's expectations regarding earnings created an opportunity to make investments your company has been holding off on to date?N = 123

§ 71% are actively pursuing M&A § 43% say it is a good time to prepare to act

§ 90% are actively pursuing M&A, but only 60% say now is the time to buy

§ 52% are actively pursuing M&A § 65% have changed their M&A rationale as a

result of COVID-19


10

WALL STREET EARNINGS EXPECTATIONS

…as well as (all) PE backed companies (small sample size)

60%

37%No

2%Other

Yes

100%

54%

46%Planning to make non-M&A investments


100%

50% 57%

100%

50% 43%

14



0%


56 3

70%

26%

30%

74%

NoYes

47 27

By Company Type


N =

N =


Has a Covid-19 related reduction in Wall Street's expectations regarding earnings created an opportunity to make investments your company has been holding off on to date?N = 123


11

M&A MINDSET

While nearly 30% of respondents felt now is the time to buy, this is higher for finance (44%) and industrials (39%), while TMT (50%) felt things were too uncertain...

41%

30%

29%Things are too

uncertain to make an acquisition

Now is the timeto buy

It’s a good time toprepare to act

when the market returns

100%

22%39% 35% 38%

53%28%

36% 39% 44% 13%

50%25% 26% 19%

33%



23


Finance &Insurance

Consumer& Retail

2832 16 15

50%32%

65%36% 47%

29%

30%

15%

41% 27%

21%38%

20% 23% 27%

$10B - $50B$500M - $999M

60

$1B - $4.9B

14 20

$5B - $9.9B > $50B

39 15

N =

N =


By Company Size


What best describes your company's mindset to M&A currently?N = 148

§ 34% are actively looking for deals currently§ 34% have changed their M&A rationale as a result of

COVID-19

§ 22% expect a "game-changing" transaction in the next 6 months resulting from COVID-19 related distress

§ 65% are actively looking for M&A deals currently

§ 13% expect a "game-changing" transaction in the next 6 months resulting from COVID-19 related distress

§ 25% are actively looking for deals currently


12

M&A MINDSET

…and PE backed companies (60%) (small sample size)

41%

30%

29%

It’s a good time toprepare to act

when the market returns

Now is the timeto buy

Things are too uncertain to make

an acquisition

100%

40%48%

20%

31% 17%60%

29% 35%20%

5



23118


40% 41%

46%

17%

14%

42%

No

78

Yes

70

By Company Type


N =

N =


What best describes your company's mindset to M&A currently?N = 148


13

ACTIVE M&A OPPORTUNITY PURSUIT

Just under half of respondents are actively seeking M&A opportunities, more in industrials (63%) and $5B-10B companies (70%)

47%

53%

Yes

No

34%

55% 63%

25%44%

66%

45% 38%

75%56%

16

Consumer& Retail


24



29

Finance & Insurance

32 16

50% 45%

70%

45%25%

50% 55%

30%

55%75%

$5B - $9.9B$500M - $999M $1B - $4.9B $10B - $50B > $50B

2014 62 40 16

N =

N =


By Company Size



Are you actively pursuing any M&A opportunities currently?N = 152

§ 50% would prefer stronger performing assets§ 33% plan to make M&A related investments

§ 70% are actively looking for deals currently§ 56% have not changed their M&A rationale as a result

of COVID-19


14

M&A OPPORTUNITY TYPE

~90% of those pursuing M&A are looking for smaller acquisitions, except finance and small companies ($500-$999M) that appear to be seeking larger acquisitions...

Joint venture (or partnership)

Minority equity stake(s)

Larger acquisition(s) 33%

87%Smaller acquisition(s) / bolt-ons

Debt-like investment

Transformational acquisition

29%

16%

13%

3%


By Company Size

15% 13%10% 14%20%

21% 15%

25% 14% 15%

38% 21%

40% 45% 48% 50%

14%

43%

29

7%


5% 0%0% 7% 0%0%



27

0%0%

Finance & Insurance

7%7%

7%

Consumer& Retail

20 8 14

10% 13%15%

31%

10% 15%16%

15%

46%

17% 19%16% 31%

60%

19%

48%15%

41% 31%

27

$1B - $4.9B

8%5%

0%$500M - $999M $10B - $50B

0%0% 4%4%

$5B - $9.9B

6%

0%0%8%

> $50B

4213 31 13

N (responses) =

N (responses) =


What types of M&A opportunities are you pursuing? (multiple selections allowed)N = 70

§ 31% say it is a good time to prepare to act§ 31% would prefer stronger performing assets§ 23% have not changed their M&A rationale as a

result of COVID-19

§ 38% say now is the time to buy§ 25% would prefer more distressed assets§ 25% have changed their M&A rationale as a result of

COVID-19


15

SOUGHT AFTER ASSET TYPE

While >70% of respondents, especially in healthcare, are looking for stronger performing assets, those in finance and consumer, and $10-50B, seek more distressed assets…

72%

32%

8%

Stronger performingassets

Poorly performingassets

More distressedassets


By Company Size

71% 81% 71%50% 50%

24%13% 29%

40% 50%

10%


6% 0%



6%

Finance & Insurance

0%17

Consumer& Retail

17 16 10 10

60%74% 75%

42%67%

30%20% 25%

50%17%

10% 8% 17%

10

$10B - $50B$500M - $999M

0%7%

$1B - $4.9B $5B - $9.9B > $50B

46 12 24 6


In the current environment, what type of assets are you looking for? (multiple selections allowed)N = 87

N (responses) =

N (responses) =

§ 50% are pursuing smaller / bolt-on acquisitions as M&A opportunities§ 38% have not changed their strategic rationale for M&A

§ 50% have changed their M&A rationale due to COVID-19§ 25% expect a "game-changing" transaction in the next 12 months

resulting from COVID-19 related distress


16

SOUGHT AFTER ASSET TYPE

…as are respondents at private companies and those actively pursuing M&A

72%

32%

8%

Stronger performingassets

Poorly performingassets

More distressedassets

70%

41%

80%

23%

50%

20%9% 0%7%



70


22 5

60% 70%

33% 23%

7%

Yes

58

No

408%

By Company Type


N (responses) =

N (responses) =



§ 76% are pursuing smaller / bolt-on acquisitions as M&A opportunities

§ 47% plan to make M&A investments

§ 50% say it is a good time to prepare to act§ 50% expect a "game-changing" transaction in the next 12

months resulting from COVID-19 related distress


17

M&A PURSUIT TIMELINE

While 38% of respondents have no timeline for M&A pursuits, especially in TMT, HCLS C&R and >$50B, companies at $10-50B planned to look in the next 6 months…

Plan to look after the next 12 months

38%No timeline to begin looking

20%

Plan to look in the next 6 months

Do not plan to look in the next 6 months,but in the next 12 months

30%

13%

15% 14%

43%

10%25%

31% 43%

29%

30%13%

54%43%

40%25%

29% 20%38%

Consumer& Retail


0%Technology /

Telecom / Media

0%

0%Finance & Insurance


13 7 7 10 8

25% 15% 20% 14% 14%

50%

19% 20%

64%

14%

19%

40%

21%

14%

25%46%

20%

57%0%

$500M - $999M $10B - $50B$1B - $4.9B $5B - $9.9B

4 7

> $50B0%

26 5 14

N =

N =


By Company Size


What is your timeline to begin actively pursuing M&A opportunities?N = 56

§ 62% say things are too uncertain to make an acquisition

§ 38% have changed their M&A rationale as a result of COVID-19

§ 38% would prefer stronger performing assets




§ 50% say it is a good time to prepare to act when the market returns


§ 38% would prefer more distressed assets


18

M&A PURSUIT TIMELINE

…and tend to be private companies

No timeline to begin looking 38%

Plan to look in the next 6 months

Plan to look after the next 12 months

Do not plan to look in the next 6 months,but in the next 12 months

30%

13%

20%

16% 25%

100%

19%

50%26%

25%40%


0%0%


0%0%Private equity

backed company

43 12 1

By Company Type

N =


What is your timeline to begin actively pursuing M&A opportunities?N = 56

§ 50% say things are too uncertain to make an acquisition§ 50% expect a "game-changing" transaction in the next 12 months resulting from

COVID-19 related distress


19

COVID DEAL INTERRUPTION

While ~80% of companies with active pre-COVID deals had deals put on hold, smaller

companies ($500M-$1B) and those in TMT and industrials reported less disruption…

63%

37%No

Yes

100%

19%

53%

14%

15%

100%

None of the deal processes

put on hold by the seller

All deal processes


Most deal processes


Some deal processes


31%

14%

31%

57%

75%

38% 68%44%

29%

13%13%

9%13%

14% 13%19%

9% 13%

Consumer

& Retail

Technology /

Telecom / Media

Finance &

Insurance

Healthcare, Life

Sciences & Pharma

16

0%

Industrials /

Manufacturing

8

0%

22 16 7

30%22%

13% 19%

75%

40% 58%

33%

56%

13%20%

27%

15%

13%10% 14%27%

11%

0%

$1B - $4.9B$500M - $999M

6%

> $50B$5B - $9.9B $10B - $50B

810 36 15 27

N =

N =


By Company Size



Did you have any deals under consideration / evaluation when COVID-19 hit?N = 152


§ 56% have not changed their M&A rationale as a result of COVID-19




20

COVID DEAL INTERRUPTION

…as did respondents at PE backed companies (small sample size)

63%

37%No

100%

Yes

19%

53%

14%

15%All deal processes put on hold by the seller

Most deal processes put on hold by the seller

Some deal processes put on hold by the seller

None of the deal processes put on hold by the seller

100%

22% 25%

51%

59%

75%

14%18%

14% 18%



0%

6%Privately held

company

0%73 17 4

19% 19%

53% 53%

13% 16%

16% 13%64

NoYes

32

By Company Type


N =

N =


Did you have any deals under consideration / evaluation when COVID-19 hit?N = 152


21

EXPECTATION FOR “GAME-CHANGING” INDUSTRY TRANSACTION

>40% of respondents expect a “game-changing” transaction in the next year, especially in healthcare (83%) and consumer (75%), and those at $1-5B (73%)…

64%

36%Not likely

Likely

100%

21%

45%

29%

5%

Likely in the next 6 months

Likely in the next 6-12 months

Likely in the next 1-2 years


100%

16% 24%33%

17% 25%

47%

59% 33%

42%

50%

32%12%

20% 42%25%

13%0%

Consumer& Retail


0%


5%


Finance & Insurance

6%

19 17 15 12 12

33%22% 13% 20% 20%

22% 51%50% 44% 40%

44%22% 38% 32%

20%

20%

164%

$5B - $9.9B$1B - $4.9B

0%

$500M - $999M

5%37

0%

$10B - $50B > $50B

9 25 10

N =


By Company Size

N =


Do you expect a "game-changing" transaction in your industry resulting from COVID-related distress? (e.g. Amazon acquisition of Whole Foods)N = 152


§ 47% plan to make M&A related investments

§ 25% plan to make M&A related investments§ 58% have changed their M&A rationale as a

result of COVID-19


22

EXPECTATION FOR “GAME-CHANGING” INDUSTRY TRANSACTION

…with even expectations for near-term “game-changing” transactions (in the next 6 months) for private companies and those actively pursuing M&A

64%

36%

Likely

Not likely

100%

21%

45%

29%

5%


100%




18%

40%

100%48%

33%

28%27%


0%6%


0%15


0% 0%

79 2

28%14%

47%

44%

19%38%

No

6%47

Yes

504%

By Company Type


N =

N =



Do you expect a "game-changing" transaction in your industry resulting from COVID-related distress? (e.g. Amazon acquisition of Whole Foods)N = 152

§ 49% say it is a good time to buy§ 43% have not changed their M&A rationale

as a result of COVID-19

§ 53% say it is a good time to prepare to act§ 73% have changed their M&A rationale as a

result of COVID-19


23

CHANGES TO M&A RATIONALE

While 56% of companies are not changing their M&A rationale, finance and consumer companies appear were more likely to change…

Yes, focus on achieving vertical integration

No, our M&A rationale has not changed 56%

Yes, focus on entering new geographies

22%Yes, focus on acquiring new capabilities

Yes, focus on acquiring customers

Yes, focus on building scale

Yes, focus on entering new product

/ service markets

20%

18%

16%

10%

9%


By Company Size

11% 8%12%

19%16%

12%15%13%

24% 12%14%

13%

16% 23%

12%

15%

13%

28% 27%48%

33%50%

4%7%

7%


7%

0%Healthcare, Life

Sciences & Pharma

5%7%


7%

3%

7%7%

7% 0%Finance & Insurance

Consumer& Retail

2642 46 30 25

14% 3% 4%10%17%

14%10%

15%

13%

18%

10%14%

11%

21%

14%

13%17%

17%13%

32%51%

38%24%

38%

5%

$1B - $4.9B

5%

$500M - $999M

3%

7%

3%$5B - $9.9B

9%

$10B - $50B

4%

24

> $50B

8%8%

22 77 29 71

9%

8%

N (responses) =

N (responses) =


How has your strategic rationale for M&A changed as a result of Covid-19? If so, how? (multiple selections allowed)N = 147

§ 12% plan to make M&A related investments§ 28% expect a "game-changing" transaction

in the next 12 months resulting from COVID-19 related distress


§ 31% say it is a good time to prepare to act


24

CHANGES TO M&A RATIONALE

…as well as private and PE backed companies (small sample size), and those actively pursuing M&A opportunities

Yes, focus on acquiring customers

No, our M&A rationale has not changed

Yes, focus on entering new product

/ service markets

Yes, focus on acquiring new capabilities




56%

22%

20%

18%

16%

10%

9%

10%20%

12%10%

9%

15%20%

12%

10%

20%

11%

20%

10%

15%

17%

20%43%

17%


5%

169


5%

41


0%

10

14%10%

13%

15%10%

16%13%

31%44%

7%

117

Yes

7% 7%5%

No

106

8%

By Company Type


N (responses) =

N (responses) =




§ 20% are pursuing smaller / bolt-on acquisitions as M&A opportunities

§ 26% say now is the time to buy§ 31% have not changed their M&A rationale

as a result of COVID-19


25

M&A CHALLENGES

Internal uncertainty is a top M&A challenge (54%) across industries and company sizes, followed by finding the right targets and sellers putting deals on hold

The right deal not coming to market

Constrained access to capital / financing

Internal uncertainty with respect to

making acquisitions

Sellers putting in-process deals

on hold

Few new deals coming to market

Elevated multiples / valuations

No challenges

Too many potential buyers involved

54%

34%

34%

28%

21%

20%

7%

8%


By Company Size

10% 8%7% 13%8% 9%

8%17%

21%12% 9%

21% 13%12%7%

16%

17%

18%10%23%

16%

13%

8%14%25%

21%

13%

31%30%18%

33%

4%




4%

Finance & Insurance

0%Consumer

& Retail

50 57 61 24 39

0%

4%4%

3% 0%3%

12% 5%8%8%

11% 11%

8%11% 14% 8% 11%

16%

11% 16% 16% 11%

8%18% 14% 17% 18%

20%15% 14% 18% 18%

20%30% 30% 23% 21%

28

$10B - $50B2%

$500M - $999M $1B - $4.9B $5B - $9.9B2% 7%

> $50B

25 127 44 83

2% 7% 7%7%

2% 5%

N (responses) =

N (responses) =


What challenges are you seeing as you pursue your M&A strategy? (multiple selections allowed)N = 149


26

M&A CONCERNS

Inability to forecast (60%) and market uncertainty (49%) were key M&A concerns across industries and company sizes, and especially in Healthcare and Industrials


By Company Size

22% 16% 17% 18% 17%

20%12% 17%

27% 25%

31%

28%27%

27% 31%

27%44% 38%

27% 28%


22

Consumer& Retail



4349

Finance & Insurance

52 36

16% 19% 19% 18% 13%

16%23% 24% 19%

26%23% 31% 30%

38%

42% 35% 26% 33% 42%

42107

$500M - $999M $1B - $4.9B > $50B$5B - $9.9B $10B - $50B

2419 67

8%

N (responses) =

N (responses) =


What are your biggest concerns with doing M&A right now? (multiple selections allowed)N = 147

60%

Company needs to conserve capital

Accurately forecasting is very challenging

31%

49%

Company needs to focus on execution

It’s very difficult to know where themarket is headed

36%

§ 31% are actively looking for M&A deals currently§ 33% expect a "game-changing" transaction in the

next 12 months resulting from COVID-19 related distress

§ 15% say now is the time to buy§ 29% have not changed their M&A rationale as a

result of COVID-19


27

M&A CONCERNS

…as well as public and private companies

36%

Accurately forecasting is very challenging 60%

It’s very difficult to know where themarket is headed



49%

31%

17% 17%29%

20% 19%

43%29% 25%

14%34% 39%

14%



36


213 7

18% 18%

19% 22%

26% 30%

37% 31%

Yes No

129 130

By Company Type


N (responses) =

N (responses) =



§ 24% are actively looking for M&A deals currently§ 21% say it is a good time to prepare to act

§ 31% are actively looking for M&A deals currently§ 22% say things are too uncertain to make an

acquisition


28

Appendix


29

RESPONDENT PROFILE

Industry and company size breakdown

13%7% 8%

38%

6%

53%

34%

54%6%

25%

16%

7%

4%31%

38%

6%

31%

33%25%

31%

13%21%

Technology / Telecom /

Media

Consumer& Retail

Healthcare, Life Sciences

& Pharma

0%

$500M - $999M

0%Industrials /

ManufacturingFinance & Insurance

0%

$1B - $4.9B

$5B - $9.9B

$10B - $50B

> $50B

32 29 24 16 16

44%34% 33%

7%

29%

22%

20%13%

31%

43%

22%

26%

7% 28%

12%

7%

17%

29%

11% 8%

40%

17%0%

$500M - $999M

0%

$1B - $4.9B $10B - $50B$5B - $9.9B

0%

> $50B




Finance & Insurance

Consumer & Retail

9 50 15 29 14

Note(s): N-counts refer to number of respondents unless otherwise noted. N-counts on charts may vary due to survey logic or exclusion of certain response categories. Sources: Corporate Development Professional Survey

Industries by company sizeN = 152

Company size by industryN = 152


30

INDUSTRY INSIGHTS

Roughly one-third of TMT respondents are actively pursuing M&A currently and almost two-thirds expect a “game changing” deal in the industry in the next 12 months


45% 55% 11

Has a Covid-19 related reduction in Wall Street's expectations regarding earnings created an opportunity to make

investments your company has been holding off on to date?

N = 11

34% 66% 32

Are you actively pursuing any M&A opportunities currently?

N = 32

16% 47% 32% 5% 19

Do you expect a "game-changing" transaction in your industry resulting from COVID-related distress? (e.g. Amazon

acquisition of Whole Foods)

N = 19

71% 24% 6% 17



Planning to make non-M&A investments

No Yes





Poorly performing assets

More distressed assets

Stronger performing assets

5%10% 20% 25% 40% 20

0%

What types of M&A opportunities are you pursuing? (multiple selections allowed)N = 20

§ ~45% of TMT respondents are planning to

make M&A investments as a result of reduced earnings expectations from COVID-19

§ ~34% of TMT respondents are actively

pursuing M&A currently

§ ~63% of TMT respondents expect a “game-

changing” transaction in the industry in the next 12 months

§ ~71% of TMT respondents are looking to

acquire stronger performing assets

§ TMT respondents are most often looking

for small acquisitions, followed by larger acquisitions or joint ventures


(TMT)

Larger acquisition(s)

Smaller acquisition(s) / bolt-ons

Transformational acquisition

Minority equity stake(s)

Debt-like investment

Joint venture (or partnership)”


31

INDUSTRY INSIGHTS

Over half of HCLS respondents are actively pursuing M&A currently and over 80% expect a “game changing” transaction in the industry in the next 12 months


56% 44% 16



N = 16

55% 45% 29


N = 29

24% 59% 12% 6% 17



N = 17

81% 13% 6% 16




No Yes








16% 12% 28% 44% 43


It’s very difficult to know where the market is headed



Accurately forecasting is very challenging

§ ~56% of HCLS respondents are planning to

make M&A investments as a result of reduced earnings expectations from COVID-19

§ ~55% of HCLS respondents are actively


§ ~83% of HCLS respondents expect a

“game-changing” transaction in the industry in the next 12 months

§ ~81% of HCLS respondents are looking to

acquire stronger performing assets

§ ~72% of HCLS respondents’ biggest concerns with doing M&A right now were challenges with accurate forecasting anddifficulty in knowing where the market is

heading

Healthcare, Life Sciences &

Pharma (HCLS)


32


INDUSTRY INSIGHTS

~80% of IM respondents are planning to make M&A investments but only 50% have changed their M&A rationale as a result of COVID


80% 20% 10

Has a Covid-19 related reduction in Wall Street's expectations regarding earnings created an opportunity to make investments your company has been holding off on to date? N = 10

63% 38% 24

Are you actively pursuing any M&A opportunities currently? N = 24

33% 33% 20% 13% 15

Do you expect a "game-changing" transaction in your industry resulting from COVID-related distress? (e.g. Amazon acquisition of Whole Foods) N = 15



No Yes





17% 17% 27% 38% 52

What are your biggest concerns with doing M&A right now? (multiple selections allowed)N = 52 Company needs to focus on execution


It’s very difficult to know where the market is headedAccurately forecasting is very challenging

§ ~80% of IM respondents are planning to make M&A investments as a result of reduced earnings expectations from COVID-19

§ ~63% of IM respondents are actively pursuing M&A currently

§ ~66% of IM respondents expect a “game-changing” transaction in the industry in the next 12 months

§ 50% of IM respondents’ M&A rationales have not changed

§ ~65% of IM respondents’ biggest concerns with doing M&A right now were challenges with accurate forecasting and difficulty in knowing where the market is heading

Industrials / Manufacturing (IM)

7% 7% 7% 13% 13% 50% 303%

Yes, focus on acquiring customers No, our M&A rationale has not changed

Yes, focus on acquiring new capabilitiesYes, focus on entering new product / service markets





33

INDUSTRY INSIGHTS

Only 33% of Finance respondents are planning to make M&A investments as a result of COVID and roughly half of are seeking poorly performing or distressed assets


33% 67% 9



N = 9

25% 75% 16


N = 16

17% 42% 42% 120%



N = 12

50% 40% 10% 10




No Yes








4%12% 16% 24% 16% 28%

0%

Yes, focus on entering new geographies Yes, focus on acquiring customers No, our M&A rationale has not changed

Yes, focus on acquiring new capabilitiesYes, focus on entering new product / service markets



25


§ Only ~33% of F&I respondents areplanning to make non M&A investments

as a result of reduced earnings expectations from COVID-19

§ ~25% of F&I respondents are actively


§ Only ~59% of F&I respondents expect a

“game-changing” transaction in the industry in the next 12 months

§ ~50% of F&I respondents are looking to

acquire poorly performing and more

distressed assets

§ Almost 75% of F&I respondents’ M&A

rationales have changed with acquiring

new customers as the top focus area

Finance & Insurance (F&I)


34

INDUSTRY INSIGHTS

~75% of Consumer respondents expect a “game-changing” transaction in the industry in the next year and almost 75% have changed their M&A rationale as a result of COVID


40% 60% 10



N = 10

44% 56% 16


N = 16

25% 50% 25% 0% 12



N = 12

50% 50% 100%




No Yes








§ ~60% of C&R respondents are planning to

make non M&A investments as a result of reduced earnings expectations from COVID-19

§ ~44% of C&R respondents are actively


§ ~75% of C&R respondents expect a “game-

changing” transaction in the industry in the next 12 months

§ ~50% of C&R respondents are looking to

acquire stronger performing assets and an equal number of respondents are

looking to acquire distressed assets

§ Almost 75% of C&R respondents’ M&A

rationales have changed with acquiring

new capabilities as the top focus area

Consumer & Retail (C&R)

8% 19% 12% 12% 23% 27%

Yes, focus on acquiring new capabilities

0%



No, our M&A rationale has not changedYes, focus on acquiring customers

Yes, focus on entering new product / service markets


26


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