March 5, 2020 / 8:47 PM / a month ago

Centerview's Effron says coronavirus, U.S. election to weigh on dealmaking

NEW ORLEANS (Reuters) - Corporate mergers could shrink in number by as much as 25% this year, as executives fret about the global spread of coronavirus and the impact of this year’s U.S. election, investment bank Centerview Partners co-founder Blair Effron said on Thursday.

“Deal volume could be between 15% and 25% lower in 2020,” Effron, who advises on some of the world’s biggest mergers and acquisitions (M&A), told the Tulane Corporate Law Institute conference in New Orleans.

M&A activity was off to its slowest start this year since 2012, Effron said, forecasting that deal volumes in 2020 may end up around $2.7 trillion, down significantly from the $3.5 trillion seen last year.

Corporate executives are used to managing through uncertainty, ranging from Britain exiting the European Union to China’s slowdown in growth, Effron said. But the virus and the U.S. presidential election are presenting new challenges, Effron added.

If U.S. President Donald Trump is re-elected, executives would expect to see more pressures to cut government spending and the same approach to trade with countries like China, Effron said.

If a progressive or moderate Democrat wins the White House, then a wealth tax, increased regulatory scrutiny of deals, and more support for environmental, social and governance concerns are potential risks, Effron added.

Most companies have already acknowledged a financial impact from the virus, but few have been able to say with certainty how the disruption on their business will impact their earnings.

“Whatever you tell your clients about how long it will take to get a deal done, it will take longer,” Effron said, adding “getting deals done will be much more laborious.”

The impact of the virus was also being felt at the conference, as attendees opted for elbow checks instead of handshakes. A number of bankers and corporate lawyers opted to stay away, as restrictions on non-essential travel were adopted by their firms.

Reporting by Svea Herbst-Bayliss; editing by Nick Macfie

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