Will 2022 be another exceptional year for the US M&A market?
Senior Industry Leaders Will Share Their Insights
Last year was an outstanding year for M&A transactions globally and the US was the hottest market. Around $5.9 trillion of M&A deals took place globally in 2021 and the US market accounted for 45% of the deals.
US dealmakers were expecting 2022 to be another exceptional year but the Ukraine crisis could now dampen the market. It is leading to heightened economic uncertainty and skyrocketing oil and natural gas prices. Inflationary pressures are mounting. The West's security situation has also deteriorated markedly. Will American companies and investors want to continue with M&A transactions in these circumstances or could they enter a 'wait and see' mode?
This digital dialogue presented by the Financial Times, in partnership with Datasite, provided a key forward-looking market outlook for the US M&A market and explored the risks and opportunities that this new dealmaking environment poses.
Key Takeaways
Ukraine Crisis
North American M&A activity is down compared to the same period last year, due to the Ukraine crisis and new anti-competitive regulations. HoweverNorth-American deal flow is likely to dominate global deal making this year due to European M&A activity being weighed down further by the Ukraine crisis.
Funding Costs
A rise in funding costs is also impacting deal flow, however there is still strong demand for tech companies. Private equity firms also have a lot of 'dry powder' and have continued to be strong acquirers. S&P 500 companies also have an abundance of capital and will not hesitate to do a deal if it seems right.
Supply Chain Issues
Supply chain issues continue to be one of the biggest drivers of M&A activity. Corporate resilience is now a key concern and greater emphasis is being placed on more localised supply chains. Global companies are regionalising and acquiring other firms on their supply chain in their regions. The trend started with the Covid-19 pandemic but the Ukraine crisis has accelerated it.
Economic Uncertainty
Corporates may delay deals this year due to mounting economic uncertainty. The probability of stagflation or recession is 35% and a lack of visibility about future business volumes is leading corporates to put some deals on hold.
SPACs
The boom in special purpose acquisition companies (SPACs) is over. Companies wanting to go public were attracted to the SPAC route rather than undertaking standalone IPO last year but the capital available for SPACs is down this year. Many SPACs may liquidate this year.
World-Class Business Leaders and Speakers
External Considerations
What extra due diligence is needed as a result of the Ukraine crisis, macro policy changes and growing ESG concerns?
M&A Trends
Why are there so many M&A transactions among young public companies?
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