Global dealmakers are shifting to distressed M&A in response to the difficult business climate brought on by COVID-19, according to data from Datasite and Debtwire.
More than 300 dealmakers recently polled across the U.S., Europe, the Middle East, Africa (EMEA) and the Asia Pacific region (APAC) said they expect to see more restructuring activity in the next 12 to 24 months, with the sentiment highest among U.S. dealmakers at 71% followed by EMEA (70%) and APAC (61%).
However, global dealmakers differ on what kinds of restructurings they expect to see most. Over the next 12 to 24 months, 50% of dealmakers in the U.S. said Chapter 11 bankruptcy would dominate restructuring, followed by out-of-court financing (24%), divestitures and carve outs (13%), and in-court liquidation (6%), while in EMEA, 36% of dealmakers predicted debt-financing to monopolize restructuring, followed closely by bankruptcy (31%), non-performing loans (14%), and divestitures and carve-outs (9%). In the APAC region, 31% of dealmakers said non-performing loans would dominate, followed by debt-financing (24%), bankruptcy/administration (19%), and divestitures and carve-outs (13%).
“Global dealmakers have moved beyond evaluating liquidity and immediate options and are now implementing strategies in response to the current environment,” Rusty Wiley, CEO of Datasite, said. “Though their approaches may differ, dealmakers will need access to the right tools to ensure they are efficient and effective in their restructuring efforts.”
Tools that can load large volumes of data quickly were cited as the most useful by U.S. (37%) and EMEA (39%) dealmakers, while APAC dealmakers (30%) said machine intelligence around categorization and indexing of data is the most valuable tool. APAC dealmakers (25%) said loading large volumes of data was the second most important, whereas U.S. (30%) and EMEA (18%) dealmakers cited the ability to stage data rooms as the second most useful tool for restructuring.
The poll results are based on responses from global M&A professionals who tuned into Datasite webinar events between April 23 and May 7.
Datasite, formerly known as Merrill Corporation, is a SaaS-technology provider for the global M&A community.
Debtwire is an information provider on the distressed debt and leveraged finance markets.
