The Canadian FS M&A Newsletter provides a market update and summary of key trends from the insurance, asset & wealth management, and banking sectors.
The second quarter of 2020 began in the midst of a global environment unprecedented in modern history, as the COVID-19 pandemic disrupted economic activity across the world. Globally, deal volume and value for Q2-2020 were the lowest in the past decade.1 As a result, global FS M&A volume in April and May 2020 declined by 41% from prior year levels.2
During these months, government fiscal measures and declining interest rates began to take hold and provide incentive for activity. As economies began to emerge from shutdowns and buyers took advantage of low rates and opportunistic transactions, June 2020 deal volume rebounded back to prior year levels.
Canadian Financial Services M&A deal volume, which had held up in Q1 2020, expectedly decreased in Q2 2020. Similar to global trends, as restrictions were rolled back, buyers selectively began to close transactions later in the quarter.
Despite risks of a second wave of COVID-19 and the uncertainty of the US elections, the potential for deal activity remains. As deal activity resumes, buyers may have an opportunity to earn outsized returns—as was the case on well-timed transactions after the 2008-2009 recession. However, finding value will require differentiated diligence.
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Sources: SNL and KPMG research
(1) Refinitiv, July 2020
(2) Based on transaction values disclosed in SNL database as well as additional transaction volume identified by KPMG research
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