ISSUE 2 | 2022
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KEY SECTORS AND DEALS The three top performing sectors in the quarter were TMT (23 deals), Industrials & Chemicals (12) and Energy, Mining & Utilities (8), which together accounted for 67% of quarterly deal volume. So far in 2022 there have only been four deals completed within Business Services and none within the Leisure sector, which is considerably lower than prior years. Of the quarter’s 64 deals, the Top 10 and Top 20 deals accounted for 54% and 78% of the total value respectively. Six of the top 20 deals took place in TMT, the biggest of which was the acquisition of Ice Group by Lyse AS (Norway) with a transaction value of USD 335m. The TMT transaction was the second biggest deal across all sectors. Real Estate recorded three deals in the quarter’s Top 20. The largest deal, at USD 307m, saw the acquisition of SG Nordic (Denmark) by Cibus Nordic Real Estate AB (Sweden), which overall was the third biggest deal. The quarter’s biggest single deal was in the Consumer sector and saw Euroapotheca, UAB (EA) (Lithuania) acquire Kronans Droghandel Retail AB (Sweden) for a deal value of USD 464m.
investments after a period of downtime during the pandemic. At the outset of the pandemic, more larger deals were postponed than smaller ones and more deals by trade buyers were postponed relative to private equity firms with ample dry powder. As markets improved, trade buyers returned and started transacting bigger deals again. Private equity firms, on the other hand, limited their activity at the outset of the pandemic, but still kept on carrying out smaller deals. One possible explanation for reduced PE deal activity could be the postponement of new platform investments, but the continued add-on activity of existing investments. Now that the pandemic hopefully is behind us, it’s likely that PE firms will increase their appetite for both larger deals and new platform investments. Due to the large fall in PE deal numbers, PE’s share of volume and value fell slightly to 17% and 16% respectively. In other words, less than one in five deals were PE deals, which is lower than previous quarters, but is generally in line with historical trends. At the peak of deal activity in Q3 2021, PE deals accounted for 30%of volume and 34%of value.
The three sectors that have seen the largest increase in deal volume over the last 12 months (Q1 2022 vs. Q1 2021) were Leisure (+100%), Real Estate (+90%) and Pharma, Medical & Biotech (+44%).
LOOKING AHEAD
The M&A market is cooling down in the Nordics as the post-COVID boom looks to be behind us. The increased geopolitical risks, future potential increases in interest rates and a weak stock market make it difficult to make predictions for the coming quarters. A likely outcome is a gradual normalization to pre-COVID levels of M&A activity. The negative trends in dealmaking activity that we have seen since the peak in Q2 2021 may continue into the second quarter of the year. In the longer term, the macroeconomic and financial indicators suggest that M&A activity will remain at historical levels. The BDO Heat Chart also supports a return-to-normal scenario. TMT and Industrials & Chemicals are expected to be the most active sectors, which together are expected to account for 47% of future volume.
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