Question

Brief down in at least 200 words of what do you think about the following summary of an article related to the impact of COVID-19 on mergers and acquisitions. Include your personal views about the following article summary statement.

The article opens up about how this past summer was one of the busiest in decades for mergers and acquisitions. There was more than one trillion worth of transactions around the globe within the third quarter. Because of the pandemic, the first two quarters were very slow. This caused many deals to be put on hold. According to Steve Morrissette, a professor at University of Chicago, smaller companies are in need of access to bigger corporations' cash. These larger corporations can then get a better value from the deal. The professor emphasized on avoiding “dumb” deals and over paying during a recession. Recessions are known to shift all types of deals that are in the process of being created. Corporations see the advantage in the value in diversifying their portfolios and buying brands that complement existing businesses. An example that was used in the article was Walmart bidding to buy a part of Tiktok. That would have made for a very diverse portfolio. Even Asish Ramchandran, a principal in the Merger & Acquisition Consultative Services practice of Deloitte Consulting agrees. He believes that big companies can make fundamental shifts when the market swings. He also shares how big companies with great sound strategy behind the scenes, are looking and waiting to step in and make a deal. The article did add that many corporations had to pull back from diversifying geographically, causing many international deals to fall through. The article then concludes with explaining how companies with the smartest strategies are using merger acquisition deals to get ahead of the pandemic and look at how business will look once the pandemic is over.

Answer 1

In this phase of global pandemic, the business has really been badly affected due to restrictions in movement, trade, decrease in the purchasing power of people etc.

But the business need to survive and for this the earliest method that they can come up with is merger and acquisition. Any company which is at the edge of shutting down can easily survive if it makes a wise decision of merging with a brand that is working at present. The world is going through a recession in which it is advised to not take any new deals, however, it is important for a company to go ahead with the deals in which they can see the potential future prospects.

for example- an Indian edutech company "Byjus" acquired an American edutech company "whitehatjr" which teaches coding to kids . The edutech companies especially in India has seen a major boom during this pandemic and thus " Byjus" which had noticed that it could win the race if it acquired a company ( which teaches coding) would be a great deal for it.

so, it took the advantage of the situation and it didn't acquire it because it had to survive the market. It could see the future as well as present prospects of the company it acquired and made the decision.

benefits of merger and acquisition:

1) increased market share

2) increase in customer base

3) increase in delivery capacity

4) increase in market value

5) market capitalisation

Since so many mergers and acquisitions are being done during this period, the business after the pandamic will be over will be a lot more different than now. We will see growth in certain sectors only. The companies which are merging and acquiring other companies will be in far better position than others.

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