The Covid-19 crisis is more serious and deeper than that of 2008

By Eric Meyer
Published May 15, 2020 | 2 min read

Eric Meyer, Managing Director France, RBC Capital Markets, shares his views of the M&A market in France during an unprecedented shock with French publication L'Agefi.

Interview originally published in Agefi Quotidien, /edition de 7 Heures, April 27, 2020 and reproduced with kind permission.


1. Confinement, which began on March 16, has halted most merger and acquisition projects. What about a month later?

The current context has weakened all of the processes, but our teams continue to work actively on certain files. In particular, we are supporting one of our clients in the sale of a major asset and have had to adapt our methods, for example by organizing virtual site visits by drone. However, the vast majority of dossiers are at a standstill, due to the difficulty of access to financing and the absence of buyers and sellers. But this is evolving gradually. During the first weeks of confinement, most of the actors, after a moment of astonishment, were in both a phase of stupor and having to take immediate measures to respond to the various issues arising from their portfolio. Today, considerations and discussions are gradually resuming, even if nothing concrete is likely to come to fruition before the start of the next school year.


2. Are sellers starting to change their requirements?

With the exception of the most affected sectors, we are not there yet. Most sellers prefer to wait, rather than sell their business under degraded conditions. The high market valuations are still in everyone's heads and it will therefore take time for supply to once again meet demand. Indeed, we are not in a V-curve with the promise of a strong and rapid rebound after May 11. The ordinate of this curve is likely to be much lower than before. But in the long term, we can indeed expect to see complicated situations where sellers will find themselves obliged to pass the baton.


3. Is the depth of this crisis comparable to that of 2008-2009?

2008 was a huge shock to the global financial system, and the entire market had been stunned. The situation today is quite different, however. If no liquidity shock is to be deplored within banking establishments, the crisis is nevertheless more serious and deeper than the previous one. Many market participants seem to have yet taken stock of the event. Are we able to forecast post-crisis consumption levels? Will business models and supply chains be able to adapt to the world of tomorrow? We don't know, but the answers to these questions are likely to impact future business performance.


4. Will the landscape of the profession change?

In the advisory business, a multitude of M&A boutiques have appeared in recent years, not without success. But this still relatively marginal position is today weakened by the collapse of transaction volumes. In this, the adage "Nobody got fired for buying IBM" applies fairly well to the M&A market, and highlights the preference of clients for the largest structures vis-à-vis the most modest in times of crisis. The drop in the number of transactions will therefore lead to increased competition, but also will challenge intermediate-sized banking players in their ability to make themselves attractive in order to attract the best talents in the market.

In the future, we can nevertheless anticipate a resurgence of activity on subjects as varied as special situations and activism.

Eric Meyer

Eric Meyer
Managing Director, Head of France

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