Industry deal brokers say no merger and acquisition deals have been canceled due to COVID-19, but the virus has put the brakes on speed of transactions and intention to pursue, say recent industry surveys. .

“Dealmaking started the year at a record-breaking pace, with a 25% increase in announcements over the same period in 2019,” says Mick Morrissey, partner at New England financial consultant Morrissey-Goodale LLC, referring to design firm deals it tracks. Transactions in March fell 50%, he says.

The firm said on April 20 that "for firms considering a sale, receiving a federal Payroll Protection Program loan could complicate matters down the road."

Of 280 design and design-build firm CEOs queried in an April 17 COVID-19 update survey by AEC Advisors Inc., 43% say transactions now are "on hold" or on the back burner, with the two categories evenly split.

"Demand for acquisitions appears likely to decline, but a few firms are looking to be more aggressive," says Andrej Avelini, president of the New York City-based financial advisor, noting companies that "need a larger, more secure partner to help them through this crisis."

Steven Gido, a principal at deal adviser Rusk O’Brien Gido + Partners, points to a “pencils down mentality” now in some firms related to M&A, with a focus on “internal organizational needs … and a hope to pick up things in the early summer.”

In other firms, “talks are still percolating but just at a lower intensity,” he says.

Alex Miller, managing director of FMI Capital Advisors, says, “For deals that do get done in the near term, we expect diligence periods extending as buyers increase scrutiny of potential acquisition targets.” He predicts more interest in infrastructure and public works firm as potential buys.

Gido and others still see big unknowns in 2020 industry revenue and profit forecasts because of COVID-19 as well as impacts from falling multiples of large public firms.

[For ENR’s latest coverage of the impacts of the COVID-19 pandemic, click here]

But “viruses don’t last forever, and with massive stimulus in play,” Gido says the second-half rebound “could be fairly dramatic.” He says many AEC firms are coming into this crisis … with record backlogs so they may be able to ride things out, depending on sectors they’re in.”

Some see the current prevalence of private-equity buyers as a key difference in M&A activity now compared to the 2008-09 recession.

“Those guys will keep buying because of lower valuations in the short term,” says one M&A broker, who contends that 20% of all AEC transactions now involve private-equity financing.