The Coronavirus Catalyst

The words ‘COVID-19’ and ‘coronavirus’ have appeared in the records of only about 150 tech transactions so far this year in 451 Research's M&A KnowledgeBase. That's slightly less than one of every 10 prints, a surprisingly small portion of deals given how broadly and deeply our work and our lives have been hit by the outbreak.

But just as the number of infections only captures a fraction of the full impact the pandemic has had on us, the number of transactions directly mentioning the pandemic vastly understates its full impact on dealmaking. Inescapably, the overwhelming disruption and uncertainty caused by COVID-19 has changed the fundamental business of M&A in recent months. It hangs over every negotiation.

Granted, a handful of the mentions of coronavirus in our deal records are found in boilerplate 'safe harbor' disclaimers about the potential risks of the announced transaction. But far more often, COVID-19 is cited as the fundamental rationale of the deal. Sometimes that’s explicit, while other times it's implicit.

• In announcing their blockbuster $7.3bn geographic consolidation earlier this month, both Just East Takeaway and Grubhub went out of their way to note in their release that online meal deliveries had rebounded to higher levels than before the outbreak.
• To help shore up the security of its suddenly ubiquitous service, Zoom reached for encryption startup Keybase. In Q1, Zoom increased its customer count an astonishing 353%, even amid mounting concerns about 'Zoom bombing' and other breaches.
• With many of its physical stores closed, Target purchased some of the 'last mile' assets of Deliv to help speed delivery of online orders.

Somewhat paradoxically – given how many tech transactions have been derailed by coronavirus – the pandemic can serve as an acquisition catalyst, too. (Deals can get printed because of it, rather than despite it.) That's true whether or not COVID-19 or coronavirus shows up in the record in the M&A KnowledgeBase. To put a point on that: Neither Zoom nor Target mention the outbreak in connection with their respective acquisitions.