Playing pandemic defence

Strategic Portfolio Management

The pandemic influences the decisions leaders make in the coming months, shaping their new normal and determine how they can thrive in a post-COVID-19 world. For many enterprises, this means that they also need to reconsider their Strategic Portfolio Management. Because with COVID-19 bringing an unprecedented uncertainty which is accelerating the importance of digital transformation, building a resilient portfolio for your M&A strategies is as important.

Key findings for your M&A

Organisations experiencing significant disruption are likely considering many options to raise capital that will fund operations or future investment. They’re likely also reviewing their portfolios, considering strategic divestment of non-core assets to strengthen the remaining organization.
Divestiture activities will have a strong influence in reshaping businesses for the next-normal conditions. COVID-19 will revitalise the discussion of strategic portfolios, triggering a continuation –and possibly even an acceleration – of Merger & Acquisition activities.

These are the conclusions drawn by Deloitte’s global survey of M&A of professionals from 100 international organisations. As companies seek to protect core markets, accelerate transformation, and position themselves to achieve undisputed market leadership lead their markets, both offensive and defensive M&A strategies are likely to emerge in the short term.

Our key findings include:

• companies believe that M&A activity will continue and may even accelerate, COVID-19 will change why and how quickly corporations divest, but the fundamentals will likely stay the same. 
• in the short term, defensive and offensive M&A strategies will probably emerge as companies strive to safeguard core markets, accelerate transformation, and position themselves to capture unassailable market leadership.
• taking a longer-term perspective, portfolio resilience will be pivotal for sustainable business success and for weathering future crises.
• sellers are gaining more experience with divestitures, especially when it comes to volume, time to sell, and closing. Our current data shows sellers closing transactions more often, compared to prior surveys.
• bidders may be viewer, owing to COVID-19, but record levels of cash and private equity ‘dry powder’ built up during recent growth years could add an interesting twist to the post-COVID-19 market.