ISSUE 2 | 2022
02
THE OUTLOOK LOOKS SUPPORTS CONTINUES HEALTHY M&A MARKETS Despite the levelling off in deal activity to pre-COVID levels, the outlook remains remarkably strong. For the seventh quarter running our heat charts showed high levels of rumoured mid- market deals. For the sixth quarter in a row there are over 10,000 rumoured deals.
That compares to more recent historic numbers of 8,000 or more. That supports the positive outlook for M&A markets. We expect this picture to be supported by the availability of cash in private equity and capital markets coupled with relatively cheap debt. Inflationary pressures, fuelled by soaring energy, raw material and food prices exacerbated by the unwanted war in Ukraine and sanction imposed on Russia
may impact this with falling levels of real income and demand. Interest rate may rise but would still continue to be at low historic levels making equity investments more attractive. We believe there will continue to be high deal activity across owner managed business, private equity and larger corporates. GLOBAL THEMES THAT ARE INFLUENCING M&A Despite the negative impact of inflationary pressures, the availability of cash to invest should continue to fuel M&A activity. The continued growth of private equity funds should continue to be a major factor. We also expect strategic buyers to continue to be active in the market as they seek to add to capability, especially technology and digital. The other big theme is the growth of ESG as companies and investors seek to acquire companies with activities that benefit the carbon footprint of the world.
GLOBAL BDO HEAT CHART BY REGION AND SECTOR
TOTAL % *
North America
493 331 333 187 354 194 182 42 33
2149 21%
Greater China
263 649 205 136 168 166 162 51 116
1916 19%
CEE
171 162 92 88 36 59 64 33 26
731 7%
Southern Europe
209 209 112 188 66 58 92 32 13
979 10%
India
92 73 56 50 50 55 17
8 5
406 4%
Latin America
138 32 75
25 14 125 45 32 9
495 5%
Nordic
58 55 34 30 25 12 15
4 7
240 2%
UK/Ireland
147
81
79 74 26 59 32 45 5
548 5%
Australasia
79 62 49 49 44 39 58 18 7
405 4%
JOHN STEPHAN HEAD OF GLOBAL M&A
DACH
85 110 60 54 59 26 12
3 10
419 4%
Other Asia
77
70 29 45 30 24 18 15 5
313 3%
South East Asia
96 90 79 57 21
65 44 15 34
501 5%
john.stephan@bdo.co.uk
Japan
60 49 36 25
9 11 14 6 5
215 2%
Middle East
26
7 15
5
5 16 8 4 2
88 1%
Africa
48 38 35
18 16 35 27
2 5
224 2%
Benelux
26 47 32 33 38 13 6 5 3
203 2%
Israel
37
31 30 25 16 18 15
7 10
189 2%
TOTAL
2,105 2,096 1,351 1,089 977 975 811 322 295 10,021 100%
* Percentage figures are rounded up to the nearest one throughout this publication. Note: The Intelligence Heat Charts are based on 'companies for sale' tracked by Mergermarket in the respective regions between 1 January 2021 and 30 June 2021. Opportunities are captured according to the dominant geography and sector of the potential target company. Mergermarket’s Heat Chart of predicted deal flow is based on the intelligence collected in our database relating to companies rumoured to be for sale, or officially up for sale in the respective regions. It is therefore indicative of areas that are likely to be active in the months to come. The intelligence comes from a range of sources, including press reports, company statements and our own team of journalists gathering proprietary intelligence from M&A across the regions. The data does not differentiate between small and large transactions, nor between deals that could happen in the short or long-term.
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