In early February, SS&C/Intralinks (in conjunction with Mergermarket) surveyed over 300 dealmakers located across the world regarding their outlook for deal making this year. Here are some of their conclusions in the study:
In the first three quarters of 2021, USD 2.1 trillion was invested across 6,494 deals in North America. From a volume perspective, this puts the region, which is dominated by the U.S. market, in a similar range as Western Europe. But in value terms, no other region comes close, and this is a high not previously seen in North America.
The scale of the U.S. government and Federal Reserve’s stimulus program rapidly brought markets back to life following the H1 2020 collapse in stocks and M&A markets. Since then, activity has been on a tear in the U.S., this is not expected to abate in 2022.
Caveat One: Of course, we must realize that this survey was completed prior to the Russian invasion of Ukraine, and the subsequent shocks to the energy sector/stock market and the impact this may have short-term on U.S. GDP. This is not to mention the sheer human tragedy we are witnessing on a daily basis and the impact that may have on buyer and seller confidence in the shorter term.
According to analysis from GlobalData (a leading data and analytics company): The ongoing Russia-Ukraine conflict is expected to affect the completion of announced or planned cross-border mergers and acquisitions (M&A) deals involving targets based in Russia or Ukraine.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “The deal-making fundamentals remain unconducive for foreign acquirers at least for the near future as no buyer likes uncertainty and market volatility. Market volatility and an uncertain business environment on the back of the ongoing war may prompt foreign buyers eyeing Russian or Ukrainian targets to withdraw or revisit their acquisition strategies.”
However, it is unclear what impact this “uncertainty” may have on North American deals. Certainly, it will likely cast a pall on buyer activity in the next few quarters in European markets. Yet, as we have seen in the past, the U.S. and Canada are two of the safest markets to make acquisitions in, even if we do shave a few points off GDP over the next two quarters due to skyrocketing oil prices.
Buyers know that this situation too will pass, and as tragically as it appears to be impacting innocent civilians in Ukraine (and our hearts go out to them daily now), the overall demand by buyers to expand market share, gain access to skilled associates, and new technology will most likely continue to drive M&A activity in North America.
Of greater concern for many dealmakers in the U.S. is the planned increase in interest rates by the Fed. A quarter-point increase in 2022 will just get us back to pre-pandemic levels, so it most likely will not hurt M&A. Larger increases in 2023 could impact M&A.
Caveat Number Two: This could of course all change if God forbid, Putin resorts to even more destructive methods in response to the brave folks of Ukraine standing their ground. Only time will tell on that front, and we pray it does not come to pass.
Again, in times of uncertainty and unknown, it is often best to stick with your plans, and if you own a privately held company in North America today, keep your eyes on the longer term. And, if shocks to the economy do impact us, now, more than ever before, you will need the guidance of Generational and its highly talented team of consulting professionals with Generational Consulting Group.
If you have any questions about how our services could help you thrive over the next few months (or even years), do not hesitate to reach out to us to speak to one of our M&A professionals. Our team is extremely experienced in guiding our clients through a myriad of other challenges over the years!
Note on Survey: In Q2 2021, Mergermarket surveyed 300 dealmakers, including 225 corporates and 75 private equity (PE) professionals. Among those, 100 are headquartered in North America, 75 in EMEA, 75 in APAC and 50 in Latin America in order to produce this report.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
© 2022 Generational Equity, LLC All Rights Reserved
it all started with a conference.
start your story today,
speak directly with one of our senior advisors +1-972-232-1121
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
Generational Group’s affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables Generational Group to serve you more efficiently and makes it more convenient for you to do business with Generational Group. Generational Group is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.
Success, you have been added to our list.