AON, a leading global professional services firm, and Mergermarket, a provider of intelligence, data and analysis of global M&A, released the latest edition of their global M&A Risk in Review.
The report suggests that last year’s resurgence of M&A activity can be somewhat sustained, albeit perhaps not at the record levels seen in 2021, with dealmakers looking forward to future transactions as they seek opportunities amid recovering global growth and pursue digital transformation. The outlook is particularly strong for M&A in sectors such as Technology, Media and Telecom (TMT) and in the Asia Pacific region.
In late Q4 2021 and early Q1 2022, Mergermarket surveyed senior executives from corporate development teams, private equity firms and investment banks.
40% of respondents were based in North America, 30% in EMEA and 30% in Asia Pacific. The survey included a combination of qualitative and quantitative research. Results were analyzed and collated by Mergermarket. All responses are anonymized and presented in aggregate.
Additional findings from the report include:
- 70% of respondents cite TMT as the most prolific sector in terms of expected dealmaking over the next 12 months. At the other end of the spectrum, 54% believe M&A will be least prolific in the energy, mining and utilities (EMU) space.
- Most respondents (54%) identify Asia Pacific (excluding Japan) as the single most attractive region for M&A over the next 12 months. Just over a third (34%) single out North America, with a further 32% also identifying the region as the second most attractive for M&A overall.
- The vast majority of respondents (90%) predict an increase in scrutiny of deals for ESG implications over the next three years; almost half (48%) believe the increase will be significant.
Even after the recent intense period of record M&A activity, dealmakers still maintain a healthy pipeline with cash at unprecedented levels
Alistair Lester, global co-CEO of M&A and Transaction Solutions at Aon
They are, however, faced with serious headwinds and new forms of volatility including geopolitical uncertainty driving inflation and interest rate increases, the acceleration of the digital economy, a constantly changing tax landscape, sophisticated cyber threats, heightened scrutiny of environmental, social and governance programs and a challenging talent market that puts pressure on people programs and integration.
In today’s environment, it is critical for both strategic and private equity dealmakers to take a wide view to mitigate exposures and make better decisions when approaching financial, tax, legal and other risks.
Dealmakers are encouraged to identify opportunities throughout the deal lifecycle to secure their assets and enhance their returns as well as examine how transactional insurance solutions can help improve transaction structures and take certain contingencies off the table for buyers and sellers.
Gary Blitz, global co-CEO of M&A and Transaction Solutions at Aon
From increased investment in technology and financial due diligence to the growing prominence of Environmental, Social and Governance (ESG) standards, trends and priorities are emerging for investors trying to navigate uncertainties related to, among others, geopolitics, government regulation and COVID-19 pandemic-related disruptions. M&A Risk in Review explores these dynamics in detail, reporting on investors’ expectations for global M&A over the next 12 months, standout sectors, the key risks they see – and how best to mitigate them.