2022 M&A Outlook

Mergers and Acquisitions in 2021 proved to be a robust and exciting year, with Q3 reaching $787 billion— completely surpassing the 2019 annual record. The pent-up demand resulted from the halted deals in 2020, resulting in a frenzy in 2021 and increased valuations.  

But will 2022 remain the same?  

Experts in the M&A sector expect 2022 to remain active, yet not as busy as 2021. Dry powder will be a massive influencer of ongoing activity in dealmaking, along with more companies in line to be sold and sellers continuing to see higher valuations due to competitors. However, a decreased fear in changes to the rise in capital gains rate will likely slow the pace of dealmaking, allowing advisors, buyers, and sellers to breathe.  

Trending industries seen in the M&A market in 2021, such as healthcare, technology, and services, are expected to continue into 2022. Many experts also predict business services, pharma, manufacturing, and consumer products to enter the playing field. Experts also expect the pandemic to weigh less on the market. Still, issues brought on by the pandemic, such as supply chain disruption, rising inflation, labor shortages, and increased labor cost, will be more pressing.   

In a recent study of Association of Corporate Growth (ACG) members, 80% of participants responded that their outlook on M&A in 2022 remains positive. Additionally, 36% of participants said that deal flow quality and quantity influenced their positive outlook, with dry powder and credit market conditions coming in at 22%.  

Overall, while some market and economic trends from 2021 will still appear and drive deals in the new year, dealmakers expect M&A activity to slow slightly while remaining positive. The Aberdeen team is diligently planning and preparing so that business owners are confident to move forward with the sale of their business when the time is right— and 2022 could be that year.