Thessa von Hülsen, Head of Corporate Development and Group Communications at MeinAuto Group; Andreas Bösenberg, Managing Director at Nord Holding; Dr. Michael Drill, Managing Director and Chairman at Lincoln International; Dr. Philipp Heer, Partner at HWF Partners; and Steve Roberts, Partner at PwC, together with panel head Dr. Nikolaus von Jacobs, Partner at McDermott Will & Emery, discussed the mergers and acquisitions (M&A) and private equity market in 2021, especially with the outlook on a post-pandemic era.
After a short introduction of this year’s panelists, Dr. von Jacobs started with the question of how the setting is changing, in terms of home office, traveling, remote work and even due diligence exercises in the digital world.
The Panelists stated that they closed their offices in part or entirely during the pandemic but worked hard to get their employees back in as fast and safely as possible. Although technology is far enough that even managing new incoming employees is not a struggle anymore, some of the panelists experienced that their staff wanted to come back in. Others mentioned that getting them back into office is the hard and challenging part and that we might never get back to the full five in-office days.
Apart from the cultural level there has also been a rapid and radical increase in transactions, especially in the healthcare and tech sector. The M&A markets are booming and there is lots of activity in all the sectors, except for real estate which is still a little behind. Technology has helped plenty in initiating and securing deals because travel time has been cut dramatically. The usual M&A cycle is broken: the typical dips in January and summer haven’t been recorded in 2021.
Valuations have been increasing during the year and it looks like they will keep doing that. Return profiles and expectations must be planned cautiously. But in contrast to the public stock market, the private M&A market has very attractive valuation levels.
Right now, there is a lot of money that needs to be invested, which boosts private equity as well. But they are looking more into the faster growing companies that are coming out of the startup mindset. Although the risk is a bit higher, there is much to learn from growth companies. The approach is very different – it’s more cultural, more investing into the people and the vision rather than the provable numbers.
Dr. von Jacobs then shifted the topic to ESG and if that is something one must account for in the day-to-day life. The panelists agreed that the investors make ESG more and more of a requirement as their targets need a high ESG rating in order to be sold. But it will be another key aspect management has to work with to improve valuations and actually drive value.
In conclusion, the post-pandemic era will be shaped by a more personal approach not only to companies and their new work models but also by a different angle on the investors’ side. The near future has lots of new layers in store that change things but also give them a new and fresh boost.
