The optimism in M&A might be sustainable though activity level would not be the same as that in 2021, said AON recently when releasing a study by the firm and Mergermarket.
In late Q4 2021 and early Q1 2022, Mergermarket surveyed 50 senior executives from corporate development teams, private equity firms and investment banks, AON noted, adding that 40% of respondents were based in North America, 30% in EMEA, and another 30% in Asia Pacific.
The optimism in M&A is supported by dealmakers who look forward to future transactions as they seek opportunities amid recovering global growth and pursue digital transformation, the firm said.
The outlook is particularly strong for M&A in sectors such as Technology, Media and Telecom (TMT) and Asia Pacific, AON added.
“Dealmakers, however, are faced with serious headwinds and new forms of volatility including geopolitical uncertainty driving inflation and interest rate increases, the acceleration of the digital economy, a constantly changing tax landscape, sophisticated cyber threats, heightened scrutiny of environmental, social and governance programs and a challenging talent market that puts pressure on people programs and integration,” said Alistair Lester, global co-CEO of M&A and Transaction Solutions at Aon.
From increased investment in technology and financial due diligence to the growing prominence of ESG standards, trends and priorities are emerging for investors trying to navigate uncertainties related to, among others, geopolitics, government regulation and COVID-19 pandemic-related disruptions, Aon observed.
- 70% of respondents cite TMT as the most prolific sector in terms of expected dealmaking over the next 12 months. At the other end of the spectrum, 54 percent believe M&A will be least prolific in the energy, mining and utilities (EMU) space.
- 54% identify Asia Pacific (excluding Japan) as the single most attractive region for M&A over the next 12 months.
- Just over a third (34 percent) single out North America, with a further 32 percent also identifying the region as the second most attractive for M&A overall.
- The vast majority of respondents (90%) predict an increase in scrutiny of deals for ESG implications over the next three years; almost half (48 percent) believe the increase will be significant.