Q3 2020 SS&C Intralinks Deal Flow Predictor: Assessing the Uncertainty in APAC

From both health and economic perspectives, the Asia-Pacific region (APAC) was the first hit with the COVID-19 coronavirus. Since then, the impact on mergers and acquisitions (M&A) has been significant.

Businesses across China were shuttered from mid-January to late April. Fundraising there dropped to its worst level in the past 12 quarters, and this rippled across the rest of APAC as the outbreak spread. In most countries, events have been suspended indefinitely to guarantee the safety of participants or by logistical challenges due to travel restrictions. Some deals have been placed on hold, and many dealmakers have been trying to wait out the storm.

While North Asia and South Korea are “back to business,” larger gatherings and corporate events draw trepidation with fears of a “second wave” of the coronavirus. Social distancing efforts will impact cross-border M&A deals. Even in a digital age, deal members still want in-person interaction and site visits, especially for larger deals. Clients are already introducing COVID-19 material adverse change (MAC) clauses into their contracts where there is a period of time between signing and completion.

Due diligence activity was also stalled, but activity picked up rapidly in early May across APAC, as it had in March in China.

Distressed M&A ahead

We can expect surges in bankruptcy, insolvency and restructuring activity, as with everywhere else in the world. Real estate fund managers should remain less impacted, given the low interest rates as RE assets are less correlated to equities.

Then, of course, there’s the danger of certain assets turning into distressed assets –especially impacting deals already in the pipeline.

Overall for APAC, we’re expecting a lot of liquidity in the markets in the coming months. If, however, a therapy or vaccine were to allow a return to some normalcy, we expect activity to ramp up at a pace that’s never been seen before.

But the million-dollar question is, “When?”

We have more in the just-released Q3 2020 SS&C Intralinks Deal Flow Predictor. The report includes a spotlight feature on the rise of M&A shareholder activism, and an interview with Sen Zhang, director of Global Fund Management at leading Chinese private equity firm JD Capital, on the state of private capital. Download your copy here.