What Enabled the Rapid Swedish M&A Recovery During the Covid-19 Crisis? A Qualitative Research Study Regarding the M&A Recovery in Sweden during 2020 Compared to Previous Crises

Abstract

The mergers and acquisitions (M&A) recovery after the Covid-19 crisis’ outbreak in 2020 is considered remarkably rapid compared to earlier crises as the recovery occurred in months instead of years. There are several explanations for this but they apply mainly to the global and American M&A market and some are exclusively reasons for the American M&A recovery. The same rapid M&A recovery has been established for the Swedish M&A market but we have, however, not found any studies about the underlying reasons for this. Thus, this thesis highlights two reasons for the rapid M&A recovery on the global and American M&A market that could be potential reasons for the Swedish M&A recovery, namely the fact the Covid-19 crisis is a different type of crisis and the rapid implementation due to the new environment companies had adapt themselves to. Consequently, the purpose of the study is to expand existing research regarding M&A activity in crises by providing a study about the remarkably rapid recovery on the Swedish M&A market during the Covid-19 crisis. The chosen method is a qualitative study consisting of interviews with both bidding companies on the Swedish M&A market in 2020 along with professionals within the Swedish M&A field. The findings show that both the fact that the Covid-19 crisis is a different type of crisis and rapid implementation stands as explanations for the rapid Swedish M&A recovery. The first explanation triggered the recovery mainly in terms of access to capital liquidity that resulted in a large focus on the stock market which, in turn, triggered the pressure for growth among companies and, hence, increased engagement in M&A activity. The second explanation triggered the recovery mainly due to the increased focus on digitalization as companies were forced to work remotely but also due to the fact that several companies had time to reflect on their businesses and make strategic changes, such as carve outs or consolidations. However, beyond the two chosen explanations, a main finding for the Swedish M&A recovery is that private capital, such as private equity firms and venture capitalists, appears as a substantial driving factor specifically for the Swedish M&A recovery in 2020.