So far, this year has been a washout for advisers and investment banks involved in mergers and acquisitions (M&A), as the Covid pandemic has forced firms to cut back on all non-essential spending and conserve cash.

However, there are rumblings that deals could come back with a vengeance in the second-half period thanks to large amounts of cash on hand at private equity firms and cheap valuations, especially in the UK.

According to international law firm White & Case, the total value of global M&A deals announced in the first half of 2020 – both completed and pending – was $901.7 billion, down 53% on the previous year and the lowest half-yearly total since the first half of 2010. The number of deals was down 32% on last year to the lowest half-yearly total since the first half of 2013.

Yet the private equity industry – which accounts for a large proportion of M&A transactions – is awash with cash and hungry for deals. According to Bloomberg, the industry started this year with a record $1.5 trillion of cash and many observers expected 2020 to set a record for takeovers.

Adding to the mix, some companies are emerging from the crisis in a healthier position than even they had contemplated, with strong cash balances after raising funds, and are looking for new opportunities to grow.

The FTSE 100 index is down roughly 19% since the start of the year and several large cap stocks now trade on single-digit forward earnings multiples.

Moreover, despite the current weakness of the US dollar, UK companies are significantly cheaper for foreign buyers than they were in 2016 before the Brexit vote sent the pound tumbling.

Rumours have been swirling this month that French hotel operator Accor, which owns the Ibis, Novotel and Sofitel chains as well as upmarket brands Grand Mercure and Raffles, was contemplating launching a merger deal with Holiday Inn and Crown Plaza owner InterContinental Hotels (IHG).

French newspaper Le Figaro suggested Accor’s management board was in favour of a combination, valuing the joint business at some $17 billion and putting it ahead of US rival Marriott in terms of hotel rooms, but its chief executive was more cautious.

At the same time private equity firms are mooted to be circling Walmart’s UK supermarket business Asda, after it was unofficially put up for sale.

Media reports suggest two US buyers – Apollo and Lone Star Funds – are vying to buy the business for up to $8.6 billion (£6.5 billion) and parachute in experienced management teams.

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