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After a decline in the current year, US investment bank JP Morgan expects many more acquisitions of companies in Switzerland in 2021. “At the end of the year, it rarely happened as much as now,” said Swiss chief Nick Bossart , in an interview with the Reuters news agency.
“We expect a strong increase in M&A volumes in Switzerland in 2021.” Several companies are working on agreements with those who want to put their business on a new basis. “Smaller, but also very large, companies are driving such transformative transactions. There are hardly any industries in which nothing works. ”JP Morgan is a top consultant in the business.
Activity has recovered strongly
The crown crisis caused many M&A projects to come to an abrupt halt from mid-March to early May, the banker said. According to data provider Dealogic, the number of acquisitions with Swiss participation fell to 401 from 522 the year before at the end of November. Because there were no major transactions, the volume dropped by more than 60 percent.
“In the meantime, activity has picked up,” Bossart said. The uncertainty factors have faded into the background. Thanks to vaccines, you can see the light at the end of the Covid tunnel. However, cost pressure is likely to increase for many companies. They could take countermeasures with mergers in their local market. However, with Covid-19, the importance of digitization has exploded. “A lot of companies will have to get stronger here,” Bossart said.
“If you don’t grow up, you buy”
The difference in valuation between fast-growing companies and fairly stagnant companies was rarely as great as it is today. “That will give a boost to the M&A market. Those who don’t grow enough from the existing business buy. “Finally, many potential buyers, such as private equity firms, would have war chests full. So-called Spacs (special purpose acquisition vehicles) would also be added.
They raise money with an initial public offering and only then look for a company that they can buy with the proceeds. In the United States, the empty company coat business is booming. For example, the men’s magazine “Playboy” wants to go back to the stock market through the back door.
Destinations in Switzerland
US Spacss had already sought targets in its own market, Bossart explained. “These spacers are also looking for destinations in Switzerland.” Divisions that want to sell large companies are of possible interest. At the same time, banks examined together with businessmen to bring a Spac to the Swiss stock exchange. “That is on the agenda of many for 2021.”
There are technical obstacles. A company that wants to join SIX must present financial figures for the last three years. A Spac couldn’t do that. “But I suppose solutions will be found.” (pbe / SDA)
