M&A at Forefront for Board Directors

The Financial Times’ AgendaWeek had several questions about the current state of M&A discussions in the boardroom. My answers, and others’, by author Stephanie Forshee.

Donna Wells
7 min readFeb 2, 2021

The impact of the pandemic is giving momentum to strategic discussions around mergers and acquisitions, according to directors and other sources. Looking ahead to 2021, research suggests that boards should anticipate an uptick in dealmaking.

For example, Donna Wells, a director on private and public boards, says that all of her four boards had conversations in 2020 related to mergers and acquisitions.

Wells serves on the board of special purpose acquisition company Apex Technologies, so the board’s deliberations “are really only about M&A,” she says. But, additionally, three of the operational boards on which she serves, Mitek Systems, Happy Money and Betterment, “have had a series of conversations” about potential targets. This was due to the fact that:

“The cost of capital has never been lower, and valuations are at a historical high. Those two conditions alone … separate from Covid and the shutdown of our economy … would have brought M&A to the forefront of board discussions” Wells explained.

Plus, companies that struggled in 2020 might be “much more open to a conversation about an acquisition,” Wells says.

Wells’s boards aren’t alone in exploring the possibilities of acquiring smaller companies.

New research from Willis Towers Watson shows that while major deals saw a slowdown in the second and third quarters of 2020, as expected, by the fourth quarter of the year, the pace began to pick up.

In the final quarter of 2020, there were 246 deals valued at $100 million or more, up from 210 in Q4 2019, which WTW views as an indicator that the year ahead shows promise in this area.

“We think 2021 is going to be one of the best years on record,” says Duncan Smithson, senior director, mergers and acquisitions, at Willis Towers Watson.


Michael Fricklas is chief legal officer and secretary of Conde Nast parent Advance Publications, which is privately held, and was the longtime general counsel who oversaw some of the biggest deals ever made at Viacom.

At Advance, “obviously, 2020 was a very different year,” he says. “Come March, it was very hard to have visibility into how things were going to play out, but we kind of pivoted from some of the things that we were looking at to businesses where new opportunities arose as a result of coronavirus — either sellers who were maybe in some financial distress or other buyers who might be less able to plan for longer-run returns to normal.”

He explains that those conditions “presented opportunities” for Advance.

Across industries, “I tend to think that there’ll be a lot of activity in 2021 as well, because anytime there’s that much disruption, things change and people see new opportunities and other people see new challenges. So there’s kind of a realignment.”

Though dealmaking picked up in Q4, overall 2020 saw 674 total mergers and acquisitions, the lowest number of deals since 2009, when only 322 deals were made. By contrast, 2015 was a record year, with 1,041 deals.

In 2020, in the thick of disruption, Advance made an acquisition of The Ironman Group, which runs marathons and triathlon events, for $730 million, according to news reports. The acquisition was announced on March 26 and closed July 20.

Fricklas refers to the Ironman deal as an example of “a business that was disrupted,” since triathlon competitions came to a halt as people everywhere sheltered in place. “They came with a strong management team, and we’ve been seeing a lot of potential in the space, so it was a good fit,” he says.

Due Diligence

Meanwhile, WTW’s Smithson says that the slowdown in mid-2020 allowed many boards to dedicate more time to their due diligence on deals.

In early 2020, Wells says her boards and others found themselves saying, “There’s no way to complete the due diligence” on a deal. By the end of the year, she says

“I was surprised and frankly pleased to see how M&A activity began to pick up again. By Q3, board members and leadership teams had become extremely comfortable with processing virtually all of the elements of the transaction remotely,” Wells shared.

Even so, she’s found that the most challenging parts of closing a deal virtually have been in assessing a target company’s culture, in addition to assessing a target’s cyber-security risks.

“The challenge still remains of making that transaction as successful in reality as we expect it to be on paper at the time the deal is closed,” Wells says.

While culture is a challenge, she says, “in many ways, M&A is a lot like any other relationship. There are a lot of clues and information that just can’t help but come through through conversations with the leaders of that company.”

Fricklas couldn’t speak to those specific challenges, since the Ironman deal had been under way before the pandemic hit. Advance has yet to acquire any companies where conversations occurred exclusively in a virtual environment, he says.

Though rethinking a transaction as the pandemic raged last spring might have made sense for certain deals, Fricklas says that at Advance, “we went pretty quickly, to be honest. We were thorough with our due diligence, but we found the ability to execute and not need a lot of reviews and not have to get third-party financing and those kinds of things gives us an advantage,” Fricklas says.

“And time is always a challenge for any deal. Things change, and you don’t want things to change while you’re doing your evaluation, so we moved pretty quickly.”

Indeed, many deals fell through in 2020, such as L Brands’ unsuccessful sale of Victoria’s Secret and Pink brands.

In February, it was announced that private equity firm Sycamore Partners would acquire a 55% stake in the lingerie chain for $525 million.

By April, talks had gone sideways and L Brands and Sycamore had each filed lawsuits against the other. The following month, the two withdrew their lawsuits and agreed that no one would pay a termination fee, according to The Wall Street Journal.

Smithson says that between the deal announcement in February and both parties’ walking away in May, all of the financial projections that Sycamore had made about Victoria’s Secret “had basically been invalidated, because foot traffic into those stores had effectively dried up.”

He believes that the deal’s crumbling had to do partially with the timing of the pandemic, but more so that the Victoria’s Secret brand is “really built on the physical retail space. Going into the store is really part of the experience.” Therefore, “the fundamentals of that business changed overnight.”

For the mergers and acquisitions that didn’t fall apart but were merely delayed, Smithson acknowledges that “deals are taking longer to get to signing.”

This is, in part, “because buyers are deliberately taking more time and effort and putting more energy and focus into their due diligence.”

Where a board in the past might have been OK moving forward on a deal with 80% certainty on future revenue and profit projections, the pandemic has made them set the bar higher and expect 90% certainty, for instance, Smithson says.


One phenomenon since the pandemic began is the rise of special purpose acquisition companies, or SPACs, which are often referred to as blank check companies. The tactic accounted for 250 public listings and $79 billion worth of investments in IPOs last year, according to data from Refinitiv.

Wells, who sits on the board of Apex, which is a SPAC, says there are pros and cons to going public using this method.

“Companies that might be considering going public through a SPAC should consider cost, control, talent and timing opportunities and challenges versus those of a traditional IPO,” Wells remarked.

The process is essentially a shell company that runs without employees, revenues or operations, but instead is a sponsoring company and a board, she explains. The SPAC, usually formed by Wall Street investors, finds a private company to merge with and take public, expediting the IPO process for the target.

Wells says the Apex board formed in September 2019. Apex announced in November of 2020 that they intended to merge with software-as-a-service company AvePoint, a Microsoft Cloud provider, in a transaction valued at $2 billion. Under the deal, which has yet to close, Apex’s co-CEOs Brad Koenig, formerly of Goldman Sachs, and Jeff Epstein, former Oracle CFO, will serve as a board observer and director, respectively.

Despite their rise in popularity, SPACs have drawn critics. David Solomon, CEO at Goldman Sachs, said in a Jan. 19 call with analysts that the rise in SPACs is “unsustainable.”

“While I think these activity levels continue to be very robust and that they do continue as we head into 2021 . . . I do not think this is sustainable in the medium term,” he said.



Donna Wells

Board Director, Tech CEO, F500 and Mint.com CMO. Working with companies solving interesting problems. Teaching the next generation of entrepreneurs at Stanford.