NEWSLETTER of July 31, 2020

The following content has been added at finexpert:

Neuberger Berman
FIXED INCOME INVESTMENT OUTLOOK Q3 2020
Aggressive fiscal and monetary actions combined with better-than-expected news on the economic recovery have contributed to a narrowing of credit spreads, while central banks now appear committed to zero (or negative) rates for the foreseeable future. Given these dynamics, much of the “low-hanging fruit” previously available to investors has been removed from the market. However, we believe that significant opportunities still exist in credit markets, coming increasingly from sector and security selection. >more

Lazard
REVIEW OF SHAREHOLDER ACTIVISM - H1 2020
Year over year activity is down in spite of a busy end to H1. 100 campaigns were launched in H1 2020, down 10% from the prior year period, as COVID-19 continued to mute pace of new activity. After April activity dipped to just 8 new campaigns, May and June saw an uptick to 16 and 17 new campaigns, respectively. Capital deployed (~$25.8bn) in H1 relatively in line with 2019 levels, in spite of reduced campaign activity. Industrials, technology and financial companies alone accounted for three-quarters of all capital deployed. >more

Accenture
COVID-19: MAKING M&A PAY
Accenture Strategy analyzed 800 global M&A transactions, finding that a minority of M&A hit that sweet spot. Just 27% result in operating margin improvement and revenue growth. Even fewer (3%) stand out as high performers with double-digit revenue growth and operating margin improvement above 5%. We delved further to determine what made these deals more successful in the long term and uncovered several factors. >more

PwC
DEALS MONITOR EUROPE: PHARMA & MEDTECH
The Deals Monitor Europe analyses the current M&A activities in the European pharmaceutical industry as well as the European MedTech sector. PwC's experts summarise the most important trends and transaction drivers for you every six months. This issue features additional insights on the COVID-19 impact. >more

CROSS-BORDER BUYOUT PRICING
Benjamin Hammer, Nils Janssen, and Bernhard Schwetzler
2020
Using a dataset of 1,149 global private equity transactions, we find that cross-border buyouts are associated with significantly higher valuation multiples than domestic ones. We attribute this finding to informational disadvantages of foreign acquirers. Consistent with this idea, we find that the spread in valuation multiples becomes smaller when the target operates in a country with high accounting standards, when it was publicly listed prior to the buyout, and when information production is facilitated due to large firm size. Further results suggest that local partnering in a syndicate serves as an effective remedy to avoid adverse pricing effects. The spread in valuation multiples is also less pronounced for large buyout funds, presumably because they draw on sufficient organizational resources to cope with cross-border-related transaction costs. >more

HOW VALUABLE IS FINANCIAL FLEXIBILITY WHEN REVENUE STOPS? EVIDENCE FROM THE COVID-19 CRISIS
Rüdiger Fahlenbrach, Kevin Rageth, and René M. Stulz
2020
Firms with greater financial flexibility should be better able to fund a revenue shortfall resulting from the COVID-19 shock and benefit less from policy responses. We find that firms with high financial flexibility experience a stock price drop lower by 26% or 9.7 percentage points than those with low financial flexibility accounting for a firm’s industry. This differential return persists as stock prices rebound. Similar results hold for CDS spreads. The stock price of a firm with an average payout over assets ratio would have dropped 2 percentage points less with no payouts for the last three years. >more