2020 M&A Annual Review

Given the amount of capital raised and the number of SPACs searching for targets, we expect to see significant de-SPAC transaction volume in 2021 and 2022. We also expect that targets may have some more leverage to negotiate favorable economics, particularly with SPACs nearing the end of their 18–24 month acquisition periods. The SPAC model may continue to evolve, requiring sponsors to put more of their capital and equity at risk. SPAC shareholders and regulators also are likely to take a closer look at proposed transactions and disclosures. ANTITRUST ENFORCEMENT CONTINUES TO FOCUS ON BIG TECH 5 Antitrust scrutiny of technology companies reached a high pitch, as investigations of digital platforms culminated in major policy proposals and enforcement actions by the FTC, DOJ, state attorneys general (AGs), private plaintiffs, and competition authorities around the world. U.S. Landscape. In the U.S., wide-ranging probes into potential anticompetitive conduct by digital platforms led to lawsuits against some of world’s largest technology companies. For example, since October 2020, the DOJ and numerous state AGs have brought three lawsuits against Google. Technology companies also faced increasing actions from private plaintiffs, as illustrated by the recent lawsuit brought by Fortnite-developer Epic against Apple. On Capitol Hill, after grilling top executives, the House Judiciary Committee completed its Investigation of Competition in Digital Markets and called for stronger antitrust enforcement and restrictions on dominant platforms. Outside the U.S. Competition authorities (for example, in the EU, UK, and Germany) continued to regulate aggressively the technology sector, in some cases promulgating new laws to address the unique issues presented by digital platforms. These broad regulatory tools are exemplified by the new draft Digital Markets Act and the Digital Services Act recently published by the European Commission. Enforcement Focus on “Killer Acquisitions.” A key area of focus for antitrust enforcers has been so-called “killer acquisitions” of nascent competitors (e.g., innovators or market disruptors). The idea that such acquisitions may violate the antitrust laws—or that a series of such transactions in high-tech industries can constitute monopolization—has been at the heart of landmark enforcements actions this year. In the policy space, the FTC ordered major technology companies to produce documents and information relating to all non-HSR-reportable transactions for the last 10 years. The study is intended to help the agency understand the competitive impact of these transactions, potentially informing future enforcement policy. Outside of digital markets, the U.S. antitrust agencies have recently alleged such conduct in Illumina/Pacific Biosciences (gene-sequencing) and Procter & Gamble/Billie and Edgewell/Harry’s (razors). Potential Expansion of HSR Info Requirements. The FTC has proposed expanding the definition of “person” under the HSR Act to include not only the buyer’s ultimate parent entity but also “associates” under common investment management authority within the same fund family. The amendments would require an acquiring party to (1) aggregate existing and to-be-acquired interests of the target across all such entities to determine whether a transaction is reportable and (2) provide detailed information for such entities in any HSR filings. This could significantly increase the volume and complexity of HSR filings for investment funds. M&A-FOCUSED ACTIVIST CAMPAIGNS AND POTENTIAL FOR OPPORTUNISTIC TAKEOVERS AFFECTED BY PANDEMIC UNCERTAINTY 6 Overall shareholder activism was down significantly in the first three quarters of 2020 compared to 2019, primarily due to pandemic uncertainty. This downward trend was also seen in the number of campaigns launched with an M&A objective. However, the third quarter saw a sharp uptick in the number In the U.S., wide-ranging probes into potential anticompetitive conduct by digital platforms led to lawsuits against some of world’s largest technology companies. 6 M&A TRENDS