July 8, 2022

M&A Activity: An Uptick On the Way?

M&A activity declined sharply in the first half of 2022, but a new Datasite report says that dealmakers expect an uptick during the second half of this year and the first half of 2023. Here’s an excerpt from the press release summarizing some of the findings:

The majority (68%) of the more than 540 global dealmakers surveyed said they expect global deal volume to rise in the next 12 months, with most (41%) expecting to see the biggest increase in transformational acquisitions or mergers, followed by debt financing (37%) and secondary buyouts (34%). Additionally, most dealmakers (78%) are pricing at least a 5-7% increase in inflation, if not higher, into their financial valuation models for the rest of the year.

When it comes to how inflation will affect deal flow, 46% of those surveyed said they expect an increase in “hard asset” M&A, such as real estate deals, and that same percentage expect to see a greater ratio of equity to debt. 34% of respondents say inflation will result in an increase in cash deals, while only 20% expect that it will result in a decline in deal activity.  Based on the survey, it appears that the biggest cloud over M&A in the second half of the year is the ongoing war in Ukraine – 36% of respondents say that the war will be the biggest reason that deals don’t go forward.

John Jenkins