Since June 2020, dealmakers have evaluated and closed more deals than ever before. According to a report done by Intralinks, 74% of North American dealmakers surveyed expect to increase their M&A activity within the next 12 months— the highest of any region. One of the main contributors expected to drive this surge is the post-pandemic trend.
No other country has seen a government stimulus at the same scale as the U.S., resulting in a resurgence of dealmaking in the market following the 2020 crash. Additional cash flow made its way into the M&A and financial markets, not only bringing new opportunities for equity raising and debt financing but a considerable demand for acquisitions. So, how will the pandemic impact continue to influence the M&A market in 2022?
There is no question that challenges and opportunities are imminent. Some view inflation rates as transitory and will level out over time, and the same can be said for M&A— once pent-up demand works through the system, deals will level out. Lower valuations are expected to be a critical post-pandemic trend, followed by increased lapsed deals and more corporate reorganizations. The primary challenge expected from COVID-19 will be more complex due diligence processes and a stronger focus on cost reductions overall.
The digital transformation that the pandemic forced many industries to embrace is expected to continually motivate M&A deals in 2022. Supply chain issues will influence logistics and manufacturing companies, who will likely be looking to add tech-enabled companies for assistance and seek investment opportunities for greater forecasting capabilities. Additionally, the forced pivot for retailers to shift from a brick-and-mortar approach to an e-commerce business model is expected to drive new changes in the consumer industry. Healthcare, of course, is expected to remain stable as the pandemic has forced its innovation and digitization in the industry.
The M&A industry is likely to see many factors resulting from the pandemic drive and influence the market overall. If you’re wondering if this is the right time to sell your business or want more information about how we can help you achieve your selling goals, reach out to the Aberdeen team for our insight, guidance, and assistance.