Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes. This interview is taken from the M&A volume featuring discussion and analysis of legal developments, keynote deals as well as an insight into typical transactions within key jurisdictions worldwide.
1. What trends are you seeing in overall activity levels for mergers and acquisitions in your jurisdiction during the past year or so?
Gavin Davies and Rudolph du Plessis: The medium and long-term impact of covid-19, and the effect of lockdown restrictions, on the economies of countries in Africa will probably dominate any discussion about business and M&A activity on the continent for a while. The pandemic has caused a lot of uncertainty, not only about the consequences of the lockdown restrictions on the economy, but also the possibility of a second wave of infections and countries’ ability to cope with infections. At the time of writing, the data seems to suggest a slowdown of covid-19 cases in Africa, but uncertainty remains about the social and economic effects of the pandemic. The uncertainty has definitely had a short-term impact on M&A activity and many transactions were delayed, renegotiated or cancelled. We do, however, expect the crisis to operate as a catalyst for change and, as a result, there will be opportunities for those with capital to invest or a desire to expand. However, we think that M&A will be different. One immediate example of such change will be that the due diligence exercise will have to have an increased focus on certain key areas such as supply chain risk (including force majeure and the possibility of further waves of the pandemic). It will also be important to understand what steps the business has taken in response to the pandemic, (eg, payment of rent) and what activities the target may have undertaken (or carried out differently) during the covid-19 pandemic that could give rise to liability.