In the first few months of the pandemic, the prognosis for M&A was dire.
Large accounting firms were furloughing entire M&A teams, April brought the first week since 2004 that no merger worth more than $1bn (£770m) was announced.
The world was – and still is – experiencing the most severe economic downturn since The Great Depression.
Time for the plethora of corporate finance houses that have thrived in a decade of digital disruption and growth to shut up shop, then? Well, apparently not.
Granted, the global marcoms holding companies have put pretty much all M&A on hold.
After all, the optics of spending millions on new talent while many existing staff are on reduced salaries – or worse, being made redundant – are not great.
But across the market as a whole, M&A interest and activity is in line with our predictions at the start of the year.
Desire for growth through M&A remains strong overall, driven by digital, data and tech-oriented acquirers and, in many cases, powered by private equity cash in plentiful supply.
Demand for the skills and technology that enable digital and marketing transformation is off the charts.
Many agencies in this space – aside from those unlucky enough to have big clients in Covid-impacted industries – are seeing their revenues grow and their profits margins increase (partly due to lower costs during lockdown).
And just as the pandemic has accelerated client demand for these skills, so it is with M&A.
Acquirers of all stripes – from PE-backed independents, to the big technology and management consultancies – see an opportunity to expand the range and scale of their services and are actively pursuing suitable acquisition targets.
An unexpected side-effect of the absence of travel during the pandemic is that M&A processes are progressing much faster. In normal times, the "courtship phase" involves juggling C-suite diaries and international travel commitments to find dates to meet.
Time ticks by… Multiply that by the number of times that principals need to meet to explore chemistry, strategic fit and financials – and again by the number of interested parties involved in the process – and it can easily take six months from initial approaches to indicative offers.
With most human interactions now happening online and key decision-makers unable to travel, we’re finding that this phase is happening at lightning speed, with initial meetings, follow-ups and deep-dive meetings all happening within the space of three or four weeks.
With every other type of critical meeting happening via Zoom et al, why not M&A?
Every one of the sale mandates that SI Partners has embarked on globally since March has received more than one offer; most have now signed Heads of Terms and are deep in due diligence; and one – Brightblue’s merger with S4 Capital’s MightyHive – completed at the end of August, after one of the fastest sale processes we have run in the last 20 years.
The past few months have proved beyond doubt that negotiating a deal, conducting due diligence and finalising contracts is faster and more efficient online.
That said, it is important for any business embarking on an M&A process not to shortcut the relationship-building and cultural alignment process that is so critical to the future working relationship between acquirer and target.
Although deals are progressing at record speed, our advice to our clients is to invest even more heavily in the "chemistry phase".
Use the volume and frequency of conversations that the online world facilitates to compensate for any lack of in-person communication.
But demand is out there and where there is commitment from both parties to invest in setting the foundations for a future growth partnership using the tools available, deal opportunities can be seized upon and mobilised at pace.
Tristan Rice is a partner at SI Partners