The impact of the pandemic on M&A wasn’t necessarily felt in its earliest days. George Riley Thomas II, a member at Metz Lewis Brodman Must O'Keefe LLC, says when the pandemic arrived in the U.S., deals were still getting done, though they were deals already in the pipeline. It wasn’t until shortly after that its effects became more apparent.

“But also during that time — more in April and May and as the summer began — we started seeing some cracks,” Thomas says. “And (we) were getting a little worried about what the future held.”

Some deals, he says, started to fail, which he attributes directly to the pandemic. And several other deals were suddenly delayed or had their terms changed.

There was concern, he says, in the deal community in general. That concern didn’t last very long.



“As we started getting into the third quarter and particularly the fourth quarter, our volume of deal work took off like a rocket,” he says. “We were worried about getting everything done at the end of the year.”

Not only was the concern regarding the pandemic’s impact short-lived, he says the effect it had on deal structure — especially deal structure changes directly related to the fallout from the pandemic — likely won’t be long-lasting.

“Once we get past the pandemic and the uncertainties that it’s creating, maybe some of the structural changes will become a thing of the past,” he says.

Still, the effects of the pandemic on M&A are expected to be felt, just maybe not in the way many thought. For example, there was already, before the pandemic, a growing imbalance between supply and demand in the M&A space. The pullback that happened on the part of buyers in 2020 is only going to exacerbate that existing imbalance.

“The amount of dry powder probably grew during the pandemic, so I don’t think any of that pressure is going to go away,” Thomas says. “We’re going to see, in 2021, even more dollars and more buyers chasing the good companies out there. And I think that that’s going to continue as we start seeing the pandemic come to its end.”

In that same vein, the impression some in the market had that COVID would hurt valuations, likely won’t come true. Instead, Thomas says the pent-up demand is likely to drive valuations higher.  

Thomas offered his assessment of the M&A market — what it looked like in 2020, and what he expects it will look like in 2021 — when he spoke on the Smart Business Dealmakers Podcast. Click on the player above to hear the full conversation.