The current M&A wave will roll on, say bullish dealmakers

01 November 2021 4 min. read
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Global professional services firm Baker Tilly has released the latest edition of its ‘Global M&A Outlook’, providing an in-depth insight into the state of the mergers & acquisitions market and expectations for the coming year. A roundup of the report’s key findings in five charts. 

With almost $3 trillion in global totals recorded since the beginning of the year, the first half of 2021 is the highest half-year on record for values. While deal values have risen into the stratosphere, volumes have lagged slightly, particularly in comparison to pre-pandemic levels. For instance, while global values were up 38% in H1 of 2021 compared to H1 of 2019, but overall deals were down by 9%. 

Global M&A

Cross-border values have risen markedly from H1 of 2019 (up 63%) to hit $771 billion in H1 of 2021 – as dealmakers commit capital to their international deal efforts. Similar to global totals, cross-border volumes are still playing catch-up: down 13% compared to H1 of 2019. 

Close to half of dealmakers (49%) today are focused on Western developed markets like North America and Europe as they plan their post-pandemic business strategies. Dealmakers noted that reliable infrastructure in North America and Europe made them attractive as investment destinations. 

Where will your company/firm look for investment opportunities in the year ahead

Adapting to changing consumer behaviours and reaching new customers remain key priorities for many dealmakers (39% each) as they prepare their future deal strategies. 

Many dealmakers (39%) also realise that in addition to adjusting to new consumer habits, deep transformations may be required to pivot and position themselves for the post-pandemic, digital era. In addition to potentially improving growth prospects, transformational M&A also provides the opportunity for dealmakers to rebuild their organisation around their core customers, enhancing operations and offerings and reaching new customers.

Which of the following best describes the main strategic driver of

Many dealmakers agree that new tech solutions will be essential to implement organisational and industry-level change – and more than half (55%) have already made such acquisitions as part of digital transformation strategies. 

Commenting on the findings, Michael Sonego, a partner at Baker Tilly in Australia said: “Having capped a frenetic half year of new records, dealmakers are bullish that the current M&A wave will roll on. Sentiment in our research shows that most are planning acquisitions and many will be looking outside their home markets for growth opportunities via cross-border M&A.” 

Outlook per region

The North American M&A outlook shows promise among respondents: 68% say dealmaking will increase in the year ahead and 39% expect a surge in M&A. In particular, respondents feel the United States offers the most potential and almost half (44%) say they will be looking for opportunities there through the near term.

What do you think will happen to the level of M&A activity in the following markets in the next 12 monthsStrong signals regarding the short-term economic outlook are driving positive sentiment towards Europe. Two-thirds of respondents (62%) say M&A will rise in the year ahead, sentiment driven by reports that successful vaccination drives and government stimulus will allow the eurozone economy to recover as soon as by year end, much earlier than expected. 

More than half (59%) of dealmakers see a robust outlook ahead for Asia Pacific, with the region’s greatest advantage stemming from lower target valuations compared to more mature markets and the long-term economic prospects in the region.

Outlook per sector

From a sector perspective, the financial services industry is forecasted to offer the most M&A opportunities. Digital transformation is a hotbed for deals, as the industry transitions to a stronger digital presence. Dealmakers also point out that many fintech start-ups in key geographies worldwide are reaching maturity, having proven their worth during the pandemic.

Which of the following sectors do you think will be most attractive over the next 12-24 months for general M&A and specifically mid-market transactions

The energy, mining and utilities sector ranks second, as industry players set out to sharpen their strategies and reassess portfolios to make operations leaner and more resilient to future change. As such, 58% of dealmakers feel these changing priorities will help fuel mergers & acquisitions. 

The pandemic and subsequent oil price crash are causing energy and resources companies to beef up their finances, lifting the number of divestitures and sell-offs. Sustainability is another large driver of sell-offs – widespread focus on sustainability objectives will see corporates exit assets that may not align with ESG frameworks.