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Audirevi TALKS (About Economy) 2.0 – M&A shows no sign of slowing in early 2022

Global M&A reached an all-time high in 2021 as dealmakers charged ahead with bigger deals in a search for growth and stability, reflecting at a macro level the recovery of the global economy last year — and expectations of further growth to come.

There are several structural and strategic drivers also at play in the M&A market:

  • corporate executives are turning to international M&A to enter new markets and geographies, looking for ways to regain momentum;
  • corporations are also keen to exit businesses no longer delivering growth, leading to a surge in divestments;
  • PE investors, sitting on a huge amount of money to spend, continues to have dry powder to deploy
  • mega deals have become more common, with growing numbers of companies now looking to take transformative decisions about the future of their businesses;
  • last but not least, the increasing importance of ESG factors is committing corporations to adapt deal strategies to sustainability and long-term value creation.

Dealmakers said mid-market deals would drive global M&A in the year ahead. They pointed to the value derived from these mid-cap transactions as a key driver, yet other factors are also taking shape to propel deals in this segment in the year ahead: mid-market deal are considered a source of fast-tracked growth, both PE buyer than corporations are focusing on smaller targets that seem offering better values compared to larger transaction; additionally, mid-market deals are also more straightforward from a regulatory perspective.

Cross-border deals remain front and centre for global dealmakers pursuing expansion strategies in key markets. Considering sectors, digital transformation continues to propel dealmaking, although ESG and fallout from the pandemic are driving interest in sectors such as energy, pharma and financial services. Businesses in every industry now recognise the imperative for digital transformation and are scrambling to secure the technology and talent that can speed their progress.

With each of these factors at the base of the deal activity, there are good reasons to expect M&A to grow in 2022 and beyond. None of these drivers appears to be dissipating in strength; indeed, many are accelerating. The ESG agenda, for example, was given extra impetus by the COP26 climate change summit in Glasgow in November 2021. The imperative for digital transformation is only gaining momentum. And with the recovery in many economies following the bounce-back from the pandemic, for many organisations cross-border opportunities represent the best opportunity to grow.

Moreover, new factors are emerging. For one thing, there is the growing possibility of distressed M&A. While Governments protected corporates during the COVID-19 crisis, offering a range of generous supports, most are now stepping back, and distressed dealmaking is now on the increase. This may be a notable M&A topic for this year.

As recent history continues to demonstrate, challenges can arrive abruptly and upend expectations. This was the case with the COVID-19 pandemic, and more recently with the dramatic escalation of events in Ukraine. Indeed, the escalation into war in Ukraine and the fallout from sanctions, higher energy costs and wider uncertainty, once again have the potential to reshape the dealmaking environment.

Edited by Andrea Moresco – Partner Nexia Audirevi


Read the Audirevi Talk by Andrea Moresco “Definizione della posizione finanziaria netta in base agli Orientamenti ESMA: aspetti interpretativi”