February 17, 2023

Cross-Border: Key Trends Driving Global M&A

This Cooley blog discusses 10 key trends from the European market that shaped global M&A in 2022 and are expected to continue to impact deals this year.  Many of these trends mirror those in the US market, including the importance of “dry powder” among potential buyers, extended timelines for antitrust review, heightened national security scrutiny, and an increased focus on “bolt-on” acquisitions.

However, as someone who hasn’t paid close attention to the European market, one trend came as a bit of a surprise to me – the continuing interest in SPACs and deSPAC transactions:

Reverse mergers gained substantial momentum in 2022 as the more traditional IPO market remained shut, share prices in the public market took a significant hit, and avenues for additional liquidity became scarce. Acquiring a distressed public target, especially one with a healthy cash balance, via a reverse merger provided an alternative path to becoming a public company and potentially gaining access to additional financing, and there is no sign of slowdown into 2023 as the number of distressed public companies remains on the rise.

While deSPAC transactions in the US declined significantly in 2022 – in light of relevant Securities and Exchange Commission guidance, record-high redemptions and fewer investors willing to provide private investment in public equity (PIPE) financing – we continued to witness solid deSPAC activity in 2022 in the cross-border M&A space.

The blog says that because many SPACs will reach the end of their life cycles in 2023, we should look for a final push by sponsors to sign up deals with target companies this year – assuming that regulators don’t effectively kill SPACs.

John Jenkins