Mergers Have Bounced Back. But Will Biden See an M&A Boom?
Through turmoil, pandemic, and recession, the merger business has kept ticking. After pausing in March, deals resumed. According to Dealogic, 2020 has had 6,707 U.S. announced transactions totaling $1.1 trillion as of Nov. 10, compared with 8,752 worth $1.6 trillion for the same period in 2019. From Sept. 2 to Nov. 10, volume lagged behind 2019, but valuations were twice that of the earlier period.
Now that Joe Biden is president-elect, deal makers are recalibrating expectations. News about a Pfizer / BioNTech vaccine brightens hopes for an economic bounceback. Milton Berlinski, co-founder of private-equity firm Reverence Capital, predicts that merger activity will be “business as usual while rates are low.” Private equity, which is sitting on $1.6 trillion of cash, will, he adds, be acquisitive into 2021.
Biden promises a “relatively stable political and tax environment going forward,” says Matthew Epstein, founder of Newbold Partners, a boutique fintech-focused investment bank. But Epstein worries about Biden continuing Trump’s antitrust activism. “Concern over dominance of the economy by a handful of tech companies will continue,” he says.
As for tax changes, the Biden campaign promised to roll back Trump tax cuts, boosting capital gains and the top corporate rate. That may have produced the recent rush to get deals done. But with the GOP now holding at least 50 Senate seats, a tax hike looks less likely. As William Blair’s head of M&A Dan Connolly writes in an email, “With a Republican Senate, Biden will not likely be able to significantly raise taxes or implement significant fiscal change that could alter the current favorable M&A market.” Even the merger business could use some normalcy.