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#inFocus - 01/21

Corporate Restructuring and M&A Trends 2021: Sharpening the Core

The Corona pandemic is having a significant impact on corporate M&A activity. Various studies assume that the likelihood of divestitures by corporates will again increase significantly over the next 12 months and distressed M&A will also increase. But not only Corona is a challenge corporates are facing.

There are a number of other factors driving restructuring activity. The changing geopolitical landscape is a major issue, especially in light of the US presidential election and the post-Brexit arrangement in Europe. The need for digital transformation in every industry is also fueling further restructuring.

A good starting point to discuss the expected trend of the European M&A market in 2021 are the results of the Corporate Restructuring Report by our partner SS&C Intralinks, published on 11 January.  In total, 75 corporate finance and restructuring lawyers were surveyed by Mergermarket in Q3 and Q4 2020 on their expectations for developments in corporate restructuring in 2021. We have summarised some of the key findings for you (see right column).

Now we are in Q1 2021 and nothing is more obvious than to ask a panel of M&A experts from different disciplines from almost all over Europe about the actual developments and their expectations for the rest 2021.

Selected Key findings of the SS&C Intralinks report include:

  • Corporate restructuring is accelerating, with 73 percent of respondents in the process of a major restructuring or planning such activity.
  • Such restructuring is significantly more likely to involve divestment processes than M&A activity
  • Respondents expect divestment to be the most common form of restructuring activity over the next 12 months, followed by a withdrawal from unprofitable areas.
  • The most significant drivers of restructuring activity will be the global macroeconomic slowdown and the need to respond to financial stress.
  • At a corporate level, the most significant drivers of restructuring are the need for technological advancements (66 percent), regulatory or political developments (64 percent) and stagnant demand (63 percent).
  • With regard to Western Europe, respondents are most likely to expect companies to see a higher level of restructuring activity

Full report with all Key findings can be downloaded here!

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