Buyers become more demanding with respect to potential targets
AVELLUM for the second time researched how the coronavirus outbreak affected the plans of businesses to purchase or sell assets or companies in Ukraine in the next 6 to 12 months. The firm surveyed over 90 owners, top managers, and heads of legal departments of Ukrainian and international companies in 2021.
Key findings from the report
In 2021, the share of companies intending to buy a business decreased from 50% to 37%. The percentage of companies planning to sell the business has not significantly changed (30%).
The number of companies planning to sell businesses due to the coronavirus has doubled (38% vs 18% in 2020). 50% of potential buyers are interested in buying specifically because of the pandemic. Sellers and buyers are taking the pandemic more seriously as an impact factor in M&A transactions.
Buyers are more demanding with respect to potential targets. They prefer comprehensive warranties as to the target (62%) and its full-scope due diligence (86%). There is a clear tendency towards creating conditions for the buyer’s market.
70% of respondents defined the current situation in Ukraine as satisfactory for buying or selling a business. One third believe that the current situation in Ukraine is favourable, and only 11% of the respondents view it as unfavourable for such transactions.
Sellers and buyers are unwilling to take risks in times of crisis. In 2021, the share of companies that believe that both parties need external advisors has nearly tripled (from 32% in 2020 to 85%).
As in 2020, more than half of the companies for sale (60%) are willing to offer a discount due to the crisis. At the same time, the share of buyers expecting a discount has decreased from 94% to 56%. Now it almost matches sellers’ plans to offer a discount.
Please SEE THE FULL REPORT for more information and findings.