Merger activity came to a halt last week with no new deals announced, four deals closing and one deal terminated.
This is the second time in four weeks no new deals were announced. We wrote the following three weeks ago,
If the economic situation deteriorates further and impacted industries are not able to benefit from the massive $2 trillion stimulus package that has now passed both houses of congress, there is a good possibility that several of these deals will fall apart.
Studying the material adverse change (MAC) clause of a merger agreement may not be sufficient, as acquirers could choose to walk away from deals and take their chances in the courts. Paying attention to the kind of acquirer, the macro environment and industry specific issues is very important at this juncture.
Two deals have fallen apart since then and the latest deal to fall victim to the COVID-19 pandemic was the acquisition of Stein Mart (SMRT), which had been on our list of top 10 deals since the second week of March 2020. The company along with Kingswood Capital Management mutually terminated their merger agreement and neither party will pay a termination fee.