How is the French M&A market doing in the post-Covid period?
By Carole Hong Tran, FIDAG SARL
The first lockdown in March 2020 due to Covid-19 abruptly slowed down the French M&A market. Since the second quarter of 2021, the market trend has been dynamic for mega deals and private equity. The sharp increase in the number of mergers and acquisitions can be explained by a catch up on pending or abandoned deals and by the rebounding global market.
As the pandemic recedes, companies’ priorities are now growth and digital transformation. Indeed, during this period, many companies have become aware of their technological weaknesses. The main sectors affected by M&As are digital, communication, media, and web development, while health and home equipment sectors are booming. Also, as a result of the crisis, many restaurants and hotels are for sale today.
Main strategies of French companies
In this context, many private equities and companies are reviewing their activities and adopting an offensive strategy to diversify or to discover new markets. They are seeking to increase market share through external growth as quickly as possible by acquiring know-how without developing it internally, or generating growth by purchasing highly innovative companies. The digital sector is mainly impacted by this strategy. The second strategy is a defensive one, consisting of withdrawing from one business to refocus on another more successful one. M&As are an effective way of buying up struggling suppliers and creating synergy – for example PSA and Fiat Chrysler have merged to facilitate the transition from petrol to electric automobiles. In the post-Covid period the offensive strategy will probably be more frequently adopted than the defensive one.
The French M&A market is opening up interesting business opportunities. The post-Covid period has seen a substantial increase in business sales because of executive fatigue, management career changes, and other disruptions. The French recovery plan should further promote M&A deals on the French market.
Carole Hong TranGGI member firm
Audit & Accounting, Tax, Advisory and Corporate Finance
T: +33 1 42 80 20 81
FIDAG SARL was created in 1985 and specialises in accounting, auditing, and advice to SMEs where they are engaged in international operations, particularly tax issues, social and labour law, legal problems, accounting, and the management of operations taking place in at least two different countries.
Carole Hong Tran is a Partner with FIDAG, French Chartered Accountant, and ACCA member, with considerable expertise in statutory audit and due diligence operations.
Published: M & A Newsletter, No. 01 Autumn 2021 l Photo: Dmitry Vereshchagin - stock.adobe.com