Mario Nigro spoke on the M&A market during COVID-19 with RBC’s “Deal Dialogue” podcast

May 13, 2020
Toronto partner Mario Nigro spoke with Robert Hickey, Managing Director & Head of Mid-Market M&A, RBC about the Canadian M&A market during the COVID-19 pandemic.

On the bank’s “Deal Dialogue” podcast, Mario discussed what it takes to get a deal done in the current environment and the impact on deal structures as businesses continue to react to the pandemic.

When asked if buyers are looking at deals differently, Mario said that he is seeing elements of contingency that didn’t always exist in larger transactions. He also notes that although all banks are continuing to do business, many have increased due diligence are taking longer to issue terms sheets.

“Some larger deals ($50M+) have been put on hold, but very few have died,” said Mario. The longer it takes, the more they will fall off the table, but we’re still continuing to close medium-sized deals which are not as affected.”

“Much like in 2008 and 2009, smaller deals ($5-15M) are going through as well,” said Mario. “There is a lot of capital willing to go into smaller businesses, and it’s easier in this environment to spot resilient companies that will survive, by looking at what businesses have done well over the past few months.”

In discussing his outlook for private equity, Mario said, “many larger clients are focused on their current portfolios, which involves managing cash flow and preserving the businesses that they have.”

“Others, the value buyers, have been waiting for an opportunity for valuations to soften up a bit,” he adds. “Strategically, private equity is starting to pivot to longer-term thinking.”

“No matter what space you’re in, it’s a process of survival: working with the cash flow that you have, deciding how business will continue until things get back to normal, and how you are going to adjust to the new reality,” said Mario.

Mario Nigro is a partner in Stikeman Elliott’s Mergers & Acquisitions and Private Equity & Venture Capital Groups. Mario has extensive experience working with leading private equity and venture capital firms on numerous acquisitions and dispositions. He has worked on numerous Canadian private equity fund transactions for leading private equity firms.

Listen to the interview below: