10 Questions
What is driving deal activity across companies of all sizes?
Capital allocation
What has been the impact of private equity on the M&A market?
It has broadened its definition to include sovereign funds and family offices
What trend is expected to continue in the M&A market?
Scrutiny of core versus non-core assets
What is impacting boards' decision-making in the M&A market?
Long-term strategic vision
What is the impact of high valuations on transactions?
Use of debt in transactions
What is driving the partnership trend between private equity and companies in Europe?
Need to address challenges such as technology and ESG
What is the impact of technology on the M&A market?
It has changed the way deals are conducted
What is the impact of travel restrictions on the M&A market?
It has made deals more challenging
What is the impact of inflation on deal making?
It is uncertain
What is the impact of digital transformation on the M&A market?
It is a prevalent theme in companies across sectors
Study Notes
- M&A activity in 2021 broke records and was consistent throughout the year across regions, industries, and transaction types.
- Despite concerns about inflation and COVID-19, boards remain focused on long-term strategic vision and are looking to position themselves as winners.
- Technology, ESG, and focus on capital allocation are common themes driving deal activity across companies of all sizes.
- Private equity has seen significant growth in the past 20 years and has broadened its definition to include sovereign funds and family offices.
- Private equity's aggressiveness to enter the M&A market and put capital to work has been extraordinary.
- Mega LBOs are back due to the growth of fund sizes and increasing availability of equity checks in single transactions.
- Cross-border transactions have picked up, and there is a possibility of a greater number of larger transactions.
- Clients remain focused on risks but still want to move forward with strategic activity.
- Labor rates and inflation are here to stay for quite a period of time, which is driving boards to make decisions.
- Clients are scrutinizing core versus non-core assets more strongly, and this trend is expected to continue.
- Private equity partnerships with companies are becoming more common in Europe.
- This partnership trend is driven by the need to address challenges such as technology and ESG.
- High valuations are leading to the use of equity in transactions, but debt remains attractive due to low interest rates.
- Shareholders are more focused on strategic activity rather than return on investment.
- Activist investors are targeting larger companies and focusing on portfolio and valuation gaps.
- Europe has seen an increase in mega cap campaigns launched every two weeks.
- The low-cost funding environment may be impacted if the Fed raises rates, but it is not expected to significantly impact deal making.
- Cross-border M&A activity has surged post-summer, with travel restrictions loosening.
- European clients are now more actively participating in situations in the US and vice versa.
- The future impact of inflation on deal making remains uncertain.
- Travel restrictions in the US have been a significant constraint on executing and being competitive in the market.
- The inability to get key executives in and out of the US made deals more challenging.
- Loosening travel restrictions could lead to more activity and large cross-border deals.
- New travel restrictions, especially in the US, would be a significant dampener.
- Digital transformation is a prevalent theme in companies across sectors.
- Technology has changed the way deals are conducted.
- Technology has also impacted the pace of transactions.
- The prevalence of technology is an important theme.
- The speaker expects to see more deals conducted with the use of technology.
- Technology will continue to impact the way deals are conducted.
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