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Global mergers and acquisitions are likely to remain bullish in 2022 as the environment for deal making remains fundamentally attractive, a new report said.
Bain & Company said a well-balanced mix of market signals suggest the strategic M&A market will continue to be robust, with 89 percent of executives surveyed saying they expect deal activity to stay the same as in 2021 or increase during 2022.
“We are on the lookout for risk factors, but do not yet see overarching signals of a slowdown,” said Dirk Vater, EMEA head of financial services at Bain & Company.
He said there are several risk factors that could complicate the positive outlook, such as macroeconomic complications, evolving regulatory scrutiny and the impact of geopolitical evolutions, particularly regarding China.
“We are likely to witness an evolution in each of these risk factors in 2022, but no significant changes across all of them are expected in the short term,” Vater said.
“The major fundamentals for dealmaking remain attractive for buyers, and it is unlikely that there would be a significant change in the relevance of M&A as a growth driver in 2022.”
Bain’s latest global M&A report said global deals reached $5.9 trillion in 2021, up 47 percent on 2020. Deals involving financial investors, special purpose acquisition companies (SPACs) and venture capital (VC) firms grew by more than 100 percent.
The report said dealmakers are behind in environment and social governance (ESG) aspects, with only 11 percent of M&A executives saying they extensively assess ESG in the deal-making process on a regular basis.
However, 65 percent of those surveyed expect their company’s focus on ESG to increase.
The report also said the banking industry is “primed for heated M&A activity”.
“In an era of persistent low interest rates and economic uncertainty, it has been challenging for banks to grow their revenue organically.
“This positions M&A as a particularly important lever for growth, which could account for 50 percent of revenue growth in banking in the years ahead, an increase from the already high 35 percent rate.
“As the M&A environment heats up, however, traditional banks are facing increasing competition from private equity firms, well-funded digital-native banks, and technology firms buying banks,” the report concluded.
(Reporting by Imogen Lillywhite; editing by Cleofe Maceda)
