M&A in the time of COVID and beyond

What is clear for those engaging in cross-border M&A is that countries around the world are becoming increasingly protective of their economies and industries, with new rules being introduced and existing rules being more widely applied

M&A activity has long required those involved to consider whether the transaction gives rise to any competition or anti-trust concerns which may require approvals from relevant authorities. Cross-border transactions can also involve issues of foreign direct investment (FDI) limitations in certain jurisdictions. In the period following the millennium, barriers to cross-border transactions were generally reducing as globalization powered ahead, and cross-border trade, including M&A and joint venture transactions, became easier.

THE “GLOBAL FINANCIAL CRISIS” EFFECT

With the Global Financial Crisis in 2008, governments around the world were forced to bail out their banks.

Unlike the COVID-19 pandemic, the physical effects of the crisis were largely contained within the financial sector. For the rest of the economy, the consequences were felt mostly around the availability of credit and other forms of finance, although governments were left with huge debt piles to service.

Austerity became the buzzword when it came to budgeting. As governments sought to boost their economies, particularly through the mid-2010s, there was an increasing focus on retaining business within an economy and not outsourcing it to other, cheaper jurisdictions. This change in focus is illustrated by Donald Trump’s “Make America Great Again” slogan and Narendra Modi’s “Make in India” campaign, and the increasing tensions between China and other countries.

THE COVID-19 EFFECT