Market Review Q2 2020

The COVID-19 pandemic is impacting the M&A activity level in Denmark and Europe

Resumé

After almost ten years of growth, Danish and European M&A activity has been declining in the first half of 2020 compared to previous years due to the COVID-19 pandemic, which is felt throughout most of the world.

In Denmark, the second quarter of the year saw a decline in the number of Danish business sales. The figures for Q2 2020 show that Danish companies' appetite for international acquisitions remain at a stable level, though not as high as we saw it in 2018 and 2019. The overall Danish activity level has been characterized by the COVID-19 pandemic and continues a declining trend from the end of Q1 2020. Initially, COVID-19 prompted many financial buyers to focus on the existing portfolio rather than new acquisitions, but is now increasingly looking for new acquisitions. Financing opportunities have been limited, which explains that strategic buyers of Danish companies account for 78% of the acquisitions; 11% higher than the distribution last year.

Looking at the overall European M&A market, the level of activity in Q2 also reflects the COVID-19 pandemic after a historically strong 2019.

The Danish M&A market has experienced lower activity in the beginning of 2020 compared to the record-breaking years 2018 and 2019. This tendency has carried over to the second quarter of 2020, driven by the COVID-19 pandemic. While activity levels are still likely to be impacted in the coming months, both buyers and sellers are showing increasing appetite to pursue transactions. Despite the pandemic, Danish companies continue to have a high appetite for international acquisitions, and sales of Danish-owned, foreign companies are following the trend seen in the past few years. DANIEL SAND – MANAGING PARTNER, OAKLINS DENMARK