M&A Trends: A Revival Wind Sweeping the Market.

Mergers and Acquisitions (M&A) are a key driver of economic transformation and can be seen as a barometer of global financial health. Their frequency and scale can also reflect the confidence of businesses and investors in the economic environment.

They mirror economic dynamics, innovation trends, and entrepreneurial strategies in response to global challenges and opportunities.

Historically, periods of crisis have often seen a decrease in M&A activities, followed by recoveries marked by strategic consolidations across various sectors. After hitting a low of $1.2 trillion in 2009, the global volume of mergers and acquisitions has consistently exceeded $2 trillion annually since 2014, despite yearly fluctuations.

This pattern repeated with the COVID-19 pandemic, which caused a general slowdown in economic activities, exacerbating uncertainties and complicating the valuation of companies, crucial aspects for M&A decisions. In 2020, global mergers and acquisitions declined by 9.7% to reach $2.2 trillion, down from $2.4 trillion in 2019, thus illustrating the significant impact of the pandemic on this sector.

To illustrate the influence of the economic environment on M&A activities, the example of the hospitality industry is particularly telling. In 2019, this industry saw a significant reduction in transactions, highlighting the direct impact of economic conditions on M&A decisions in this sector.

Indeed, the significant impact of the COVID-19 pandemic on the hospitality industry was manifested by a dramatic drop in revenues, which fell by 46% in 2020 to reach $198.6 billion. This contraction directly affected the mergers and acquisitions market, making assets far less attractive due to their marked depreciation. Concurrently, the sharp decline in valuations led to an estimated 30% decrease in the global GDP of the United States, with considerable financial losses amounting to $2.7 trillion. Major hotel chains also suffered significant financial losses, with companies like Wyndham Worldwide and Marriott International experiencing revenue declines of 36% and 75%, respectively.