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M&A valuations boom in the second half of 2020, despite COVID-19 impacts on the economy

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M&A valuations are soaring, with rich valuations and intense competition for many digital or technology-based assets driving global deals activity, according to PwC’s latest Global M&A Industry Trends analysis.

Covering the last six months of 2020, the analysis examines global deals activity and incorporates insights from PwC’s deals industry specialists to identify the key trends driving M&A activity, and anticipated investment hotspots in 2021. 

In spite of the uncertainty created by COVID-19, the second half of 2020 saw a surge in M&A activity.

“COVID-19 gave companies a rare glimpse into their future, and many did not like what they saw. An acceleration of digitalisation and transformation of their businesses instantly became a top priority, with M&A the fastest way to make that happen — creating a highly competitive landscape for the right deals,” says Brian Levy, PwC’s Global Deals Industries Leader, Partner, PwC US.

Key insights from the second half of 2020 deals activity include:

  • Dealmaking jumped in the second half of the year with total global deal volumes and values increasing by 18% and 94%, respectively compared to the first half of the year. In addition, both deal volumes and deal values were up compared to the last six months of 2019.
  • The higher deal values in the second half of 2020 were partly due to an increase in megadeals ($5 billion+). Overall, 56 megadeals were announced in the second half of 2020, compared to 27 in the first half of the year.
  • The technology and telecom sub-sectors saw the highest growth in deal volumes and values in the second half of 2020, with technology deal volumes up 34% and values up 118%. Telecom deal volumes were up 15% and values significantly up by almost 300% due to three telecom megadeals.
  • On a regional basis, deal volumes increased by 20% in the Americas, 17% in EMEA and 17% in Asia Pacific between the first and second half of 2020. The Americas saw the biggest growth in deal values of over 200%, primarily due to some significant megadeals in the second half of the year.

COVID-19 accelerates deals activity for digital and technology assets in a highly competitive market

In demand assets have commanded high valuations and fierce competition, driven by macroeconomic factors. These include low interest rates, a desire to acquire innovative, digital or technology-enabled businesses and an abundance of available capital from both corporate (over $7.6 trillion in cash and marketable securities) and private equity buyers ($1.7 trillion).

By comparison, assets in sectors that have been hardest hit by the pandemic like industrial manufacturing or those being shaped by factors such as the transformation to net zero carbon emissions are creating structural changes that companies will need to address. Where the future viability of their business models are challenged, companies may look to distressed M&A opportunities or restructuring to preserve value.

Deal makers widen assessment of value creation to non-traditional sources

Non-traditional sources of value creation such as the impact of environmental, social and governance factors (ESG) are increasingly being considered by deal makers and factored into strategic decision-making and due diligence, as they focus on protecting and maximising returns from high valuations and fierce demand. 

“With so much capital out there, good businesses are commanding high multiples and achieving them. If this continues – and I believe it will – then the need to double down on value creation is now more relevant than ever for successful M&A,” says Malcolm Lloyd, Global Deals Leader, Partner, PwC Spain.

The impact of a hot IPO market on M&A

The last six months saw the prevalence of the use of special-purpose acquisition companies (SPACs) to pool investor capital for acquisition opportunities in a highly active IPO market. In 2020, SPACs raised about $70 billion in capital and accounted for more than half of all US IPOs. Private equity firms have been key players in the recent SPAC boom, finding them a useful alternative source of capital. More SPAC activity is expected in 2021, especially involving assets such as electric vehicle charging infrastructure, power storage, and healthcare technology.

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Should You Be Worried About A Coming Bitcoin Crash?

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Do you already have a wallet full of Bitcoin and are worried about them losing value in a crash like what happened three years ago? Or, are you afraid to open a Bitcoin account today as you don’t want to buy before a crash, either?

Both of those fears are valid, but you may have nothing to worry about. There are a few factors that go into crashes that can usually be seen ahead of time. Of course, nobody can make an accurate prediction based on what has happened in the past because sometimes a wildcard comes into play that nobody could have seen coming.

Should you be worried then? In this article, we are going to take a look at what is different with Bitcoin this time around so you can decide for yourself if this is a good time to buy in.

Why Bitcoin is worth so much right now

Bitcoin has always promised to one day become a global currency that would be adopted by the masses. After the crash of 2018 when Bitcoin lost almost ⅔ of its value in a matter of weeks, it looked like its promise would go unfulfilled.

At that time the people buying in were basing their decision more on the fear of missing out than on actually believing in the cryptocurrency as a mainstream currency that could be used instead of fiat.

At that time you could pay for things using Bitcoin, but because the value kept growing, nobody wanted to part with their Bitcoins.

Now, it has become far more mainstream with a couple of big factors leading the way. For one, many big institutions were buying the currency and even some stores and businesses would accept it as a form of payment. There were more signs of it becoming a viable currency in the year or so after the crash.

Then, more recently, Paypal announced that they would start offering the service for people to buy some cryptocurrency with their Paypal account. This validated the currency in the eyes of many as they trusted Paypal for years already. It suddenly became very easy for people to acquire Bitcoin where before the process may have been intimidating.

Then, Elon Musk announced that Tesla had bought over a billion dollars worth of Bitcoin and that it could be used to buy their cars. This also served as validation and the value jumped very high after the news.

Will it continue to rise?

Anything that goes up must come down, so, yes it will continue to rise but will one day either dip or crash. It is inevitable.

What’s different this time around is that more people are using it for its intended purpose and that is to pay for things. It is finally being adopted. And, if history is a guide, then it will bounce back after any crash and then rise again. Maybe even higher than ever if there is more adoption by the masses.

*This article has been contributed on behalf of Paxful. However, the information provided herein is not and is not intended to be, investment, financial, or other advice.

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Credit to Small Firms to Boost Economic Recovery

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The Lao PDR Ministry of Industry and Commerce today launched a $40 million emergency finance support project, backed by the World Bank, to help small and medium-sized businesses recover from the economic slowdown associated with the COVID-19 pandemic. The project was approved by the World Bank Board of Directors in October 2020 and signed by the government in November.

Mme Khemmani Pholsena, Minister for Industry and Commerce, declared the Micro, Small, and Medium Enterprise (MSME) Access to Finance Emergency Support and Recovery Project operational, enabling local banks and financial institutions to provide loans to small businesses that have been affected by closed borders and reduced trade over the past year. According to the Lao Statistics Bureau, over 94% of all Lao enterprises are microbusinesses.

Three banks — Lao-China, Maruhan, and Sacom — have been selected to participate in the project to lend funds to small companies that apply for loans through Line of Credit. The project is providing technical support to the Bank of the Lao PDR, which is managing a credit guarantee facility, and technical assistance to strengthen the capacity of participating businesses. More financial institutions are expected to join the project once negotiations on terms of lending are complete.

This initiative will reinforce the stability of small businesses, which are vital to the Lao economy”, said World Bank Lao PDR Operations Manager Viengsamay Srithirath. “By making it easier for small firms to access credit, the government and banks are removing one of the top three obstacles to business in Laos”.

Ms Viengsamay congratulated the Ministry of Industry and Commerce for the speedy preparation of the project during a time of economic difficulty, and said its execution would build on the success of the World Bank’s Small and Medium Enterprise Access to Finance Project, which closed at the end of 2020 after disbursing around 180 loans to small Lao companies.

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Beginner’s Basic Guide In Bitcoin Trading

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Non-fiat currencies are paving the way, and widening the horizon, might we add, in securing a future founded on the independent non-fiat currency. As you learn about BTC trading accounts, here are a few steps you can follow in bitcoin trading.

Bitcoin Trading Reviewed

Bitcoin trading, as the phrase suggests, is the exchange of bitcoins, from one user to the next. Or to a number of users at any given time. To oversimplify it, it is similar to how conventional trading works. Only, there is no commodity nor “hard money” in the mix. Bitcoins are themselves, the article to and for the exchange.

Understanding Bitcoin Trading

Pricing Movements

The first thing traders need to have an understanding of is how the price of bitcoins is set. Where does it come from? Is it fixed?

Since we know that cryptocurrencies do not rely on financial institutions, global currencies, or economic movements, we can conclude that they are not vulnerable to governments and economies. The pricing of bitcoin comes from…

Supply

There are over 21 million bitcoins all over the world today. Out of this 21 million, around 18.5 million have already been mined. This means that new players in the bitcoin scene will be given a limited amount of 2.5 million left to mine for themselves. Keep in mind that this is a global sum. Once all 21 million have been mined, there will none left in the circulation.

Bitcoin mining is basically a process in which said cryptocurrency (as owned by each user) is put into motion and is made available for trading. More about this, and in detail, on a separate post.

Analysts speculate that the entire supply of this cryptocurrency will be used up come the year 2041. What does this have to do with bitcoin pricing? To put this into perspective, think of the law of supply and demand.

When “supply” decreases and “demand” increases, pricing will be hiked up. And the less supply there is, the higher the skyrocketing of the price will go. Something bitcoin users and traders are already witnessing at present.

***You may be inclined to think that 2041 is two decades away. 20 long years to go. Only, take into consideration that the bitcoin was invented in 2009. And now, less than 10% of its total number remains!

Bitcoin Integration

As of current, there are a limited number of channels wherein bitcoins can be utilized for the exchange of commodities and/or services. In the context of integration, we are leaving out “bitcoin exchange” and/or “bitcoin purchasing” out of the picture.

Cryptocurrency is yet to make a stamp in the market as a viable means for supporting daily living. Relying on bitcoins to buy everyday-goods, easily converting them into their actual real-life prices to be stored and or transferred from bank to bank. The list goes on.

All eyes are on non-fiat currencies, especially because worldwide catastrophes have shaken people so that many are scouting for options to secure their financial futures. Bitcoin, being one of the said major options, and the highest of its kind, in-rank.

Remember the year we mentioned earlier? 2041? It is most certainly likely that bitcoin integration will take place any moment, even before that year hits. When the world begins to notice its integration, they will want to buy in.

This, then, ties in with number 2. The more people to buy-in, the higher the price of bitcoins will soar.

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