Blog Details

The COVID-19 emergency is exceptional in both its compassionate and financial impact, but history recommends how M&A will play out. While the M&A showcase has contracted, companies that are making M&A moves typically outflank those that do not. Forward-thinking pioneers have to act now to rebalance for chance and liquidity while evaluating openings for resilience and development coming out of the downturn.

The novel Coronavirus has impacted the corporate merger and acquisition activities in India. Companies that want to recover from the current crisis and gain momentum need a strategic approach. In such unusual challenging situations, well-capitalized companies should revisit their M&A strategy. The M&A environment in India is also positively affected by government initiatives, policies such as Make in India that help Indian manufacturers to expand their global market share, visible buyout stock market and stable banking system. 

There is an urgent need for domestic consolidation, particularly in covid affected sectors. This could lead to new investment opportunities for big investors in India. China’s covid led to isolation in the international community and government initiative enhancing the attractiveness as a new investment and manufacturing hub. In India during covid government support such as a moratorium on interest and a ban on new insolvency filling for some time has helped suppress the number of distressed transactions. However, the government and lenders became uncomfortable as lengthy support measures threatened their own recovery. Once support measures are stopped M&A activity starts increasing. 

Rethinking the deal-making 

The post-COVID world will unleash basic and systemic changes and it is broadly anticipated that recuperation will have profoundly deviated over locales and segments. Most segments will rehash themselves in order to flourish and numerous will utilize M&A to quicken this transformation.

But as companies get ready for an unused world with on a very basic level reshaped economies and social orders, it is inescapable the bargain making environment will too really alter. Past conventional M&A, companies have to be sent a wide range of inorganic development techniques such as organizations with their peers, co-investments with private value, speculation in troublesome advances, cross-sector collisions with pros, and association with governments.

Covid-19 drastically increased digitization and e-commerce in India. Pandemic forced India to become problem-centric. Pandemic not just triggered financial shock but also changed the way government, business and humans interact. That is no ordinary downturn, fundamental changes happened such as consumer behaviour, supply chain, market. Some of them are temporary and others are never gonna be the same. Most people started ordering groceries online for convenience due to pandemics and lockdown. This led to the sale of online grocery sites such as Grofers and BigBasket and other foods delivery companies started delivering groceries as well. Crisis reveals new opportunities and M&A has a period of strong performance. 

Innovation and new technology in the healthcare sector have developed the vaccine in record time. even though no vaccine is ever developed in less than a year and then produces vaccine doses in billions. This could only be possible by some of the pharma companies active in the M&A. The healthcare sector is still fragmented in India, so there are still more merger opportunities. 

Pandemic underlines the need for obtaining insurance. In India, a large portion of the population does not have any kind of insurance. Thus there is potential for the insurance sector to become significant in India and consequently, M&A activities increase. 

In consumer, good and retail success requires a strong brand name and also strong supply chain and deep distribution of the product. These types of industries and companies want to acquire local brands that have a strong presence in that region or local market. The pandemic crisis put a regional brand under liquidity pressure. The main reason for falling is that regional brands or small companies are rationalizing their assortment and people are shifting to online platforms. Companies and leaders can acquire these small companies and energize them by using existing privileges. parent companies can further improve the brand’s value. 

The end of the covid era now brings many opportunities in India regarding M&A transactions. The measures are taken by the Indian government to boost several sectors such as healthcare, pharmaceuticals, manufacturing, infrastructure agriculture, technology etc. Indian government initiatives such as self-reliant India, privatisation of certain sectors, make in India, flexibility and relaxation of employment laws will lead the way for becoming an investment and manufacturing hub. For successful M&A planning, companies should be very clear and certain about acquisition goals in advance.