A fourth quarter surge in merger and acquisition (M&A) activity during 2019 kept global markets bullish. The energy, healthcare and technology sectors recorded a number of iconic deals, while private equity players actively embraced larger, broader opportunities. Cue the COVID-19 pandemic.
In the second quarter of 2020, global M&A amounted to $485.3 billion, having fallen 55% from a year ago. According to data from Refinitiv, this marked the lowest total since the third quarter of 2009, while the number of deals completed were the lowest quarterly total since 2004.
In the coming year, a rise in distressed M&A activity is expected, as financiers and firms react to a spike in bankruptcies and a resurgence in restructuring mandates. On the other side, companies will tread cautiously with their investments as they renovate their business models to reflect the ‘new normal’.
Partnering with tax advisors who are leading the action, ITR brings you an exclusive insight into some of the most significant tax-related developments from the M&A world.
The emerging trend of Chinese enterprises ‘going home’ by de-listing from foreign capital markets and re-listing in China, is the subject of KPMG’s article. The move complements recent regulatory changes and an uptick in restructuring work in the jurisdiction.
The article by Galicia Abogados discusses how representations and warranties insurance has the potential of gaining popularity in Mexico, following its rise in the US. By helping reduce negotiation processes, the insurance can pave way for more competitive and efficient cross-border transactions.
Moreover, when engaging in M&A activity in Mexico, it is important to carefully consider the available methods and their consequences, before proceeding with a transaction. SMPS Legal examine how local and international firms in the country can best position themselves within the country’s complex tax framework.
In light of the economic fallout from the pandemic, South Korea looks to streamline its commercial and tax laws to facilitate efficient restructuring. The article from Yulchon explores the tax implications of asset and share acquisitions in Korea, with an eye on the financial situation.
Meanwhile, in Switzerland, withholding tax reform is poised to increase intra-group financing activities and enable corporate groups to issue bonds without hurdles. The article from burckhardt Ltd looks at how the changes will help Switzerland strengthen its capital market and attract foreign investment.
We hope the 2020 Mergers and Acquisitions guide provides useful insight.
Prin Shasiharan
Commercial editor
ITR
