Record in Acquisitions & Mergers valuations in 2021 worldwide

An unprecedented increase was observed in the value and volume of transactions in 2021 according to the research of PwC “Global M&A Industry Trends Outlook 20222022 is expected to be an equally dynamic year for Acquisitions and Mergers, due to the already planned transactions, the availability of funds as well as the continuing demand for investments in the fields of green energy, infrastructure, digital technology and food.

The study examines the current global trading activity, and includes the views of PwC executives on deals, with the aim of identifying the main trends that determine the value and volume of Acquisitions and Mergers.

2021 was a record year for Acquisitions and Mergers, in terms of volume and value. The number of transactions announced exceeded 62,000 worldwide, marking an unprecedented increase of 24% compared to 2020. Respectively, the value of transactions amounted to US $ 5.1 trillion, recording the highest levels of all time. Among them are 130 mega-deals with a transaction value of US $ 5 billion or more – 57% higher than in 2020, breaking the previous record of US $ 4.2 trillion. occurred in 2007.

Brian Levy, Global Deals Industries Leader and PwC USA Partner, comments: “After a record year of Acquisitions and Mergers, everyone is wondering what the future holds. Closing business deals looks set to remain strong in 2022, with strong competition between “Equity management companies (Private Equity) and special purpose acquisition companies (SPAC). However, growing macroeconomic and regulatory barriers are likely to lead to market volatility.”

While optimism for 2022 remains high, high interest rates and taxes, rising inflation and rising trade are likely to create structural or economic barriers to trade in 2022. Global financial market volatility is already growing. supply chains and increased fiscal debt levels due to the effects of the ongoing pandemic. Therefore, vigilance is required as faster pace of change may trigger the aforementioned or other developments earlier and with greater impact.

Private Equity companies demonstrate their ability to raise capital and increase their market share in transactions

These types of fund managers continue to make more and bigger trades. In 2021 about 40% of transactions involved a Private Equity, an increase of only 25% in the last five years. At the same time, Private Equity traded higher, accounting for 45% of the total value, compared to 30% in the previous five years. Heading towards 2022, they have strengthened their ability to trade by raising available funds at record levels (dry powder). Global Private Equity closed in 2021 with US $ 2.3 trillion in available funds, up 14% from the beginning of the year – fueling the Acquisition and Merger activity significantly for 2022. While available funding is high , it is estimated that there will be increasing pressures to find ways to create value in an environment of rising interest rates, higher multipliers and pressures due to ESG criteria.

We expect that SPAC will continue to play an important role in 2022, after the reappearance of SPAC IPOs at the end of 2021 which led to an increase in available funds for Acquisitions and Mergers. As almost 500 SPACs have not yet announced a merger, the short timeframe (usually two years) required to complete a transaction will lead to SPACs competing with Private Equity and strategic investors with trading dispositions, for the same target companies in 2022 and 2023.

The fierce competition between companies, Private Equity and SPAC will keep the multipliers high for the most attractive investments. Therefore, a strong plan to create Acquisitions and Mergers value becomes more important than ever.

Examination of portfolios leads to divestments and acquisitions in various sectors

At the company level, the strategic shift to new digital, innovative and subversive business models will continue to shape the Acquisitions and Mergers landscape. As market conditions force Boards to focus on creating more value, CEOs are likely to turn to divestments to restore balance to their portfolios to achieve longer-term growth and profitability. ESGs are also expected to increasingly influence Acquisition and Merger strategies during 2022.

The following trends are emerging in the key sectors:

Consumer markets: Consumer preferences will continue to act as a catalyst for the Acquisition and Mergers business in 2022, as corporations and Private Equity companies restructure their portfolios to take advantage of trends such as “conscious consumption” that create demand for new products and services and completely new business models.

Energy, utilities and resources: ESG criteria are an important factor in industry strategy. Acquisitions and Mergers will restore portfolio balance and facilitate value creation opportunities in growth sectors such as RES, carbon sequestration, battery storage, hydrogen, transportation infrastructure and other clean technologies.

Financial services: Competition for strategic advantage in the market continues to mobilize Acquisitions and Mergers, with technology and innovation-focused transactions predominant. The ongoing effort to optimize portfolios is expected to lead to divestment activity and at the same time to the realization of transactions based on capabilities, as companies seek to utilize technology and enhance their efficiency. Uncertain assets in the banking and insurance sectors could also cause a wave of transactions.

Health sector: Pharmaceutical companies seek to strengthen their portfolios through transactions that provide access to new technologies such as mRNA and cellular and gene therapies. In healthcare services, specialist care platforms, tele-health, healthtech and data and analysis companies are attracting investors.

Industrial production and automobile industry: Strategic portfolio revisions and ESGs are driving the Acquisition and Mergers business, specifically in transactions that are accelerating the digital transformation. Such transactions concern electric and autonomous vehicles, batteries and charging technologies, the manufacture of additives, next generation materials and production with non-mineral energy resources.

Technology, media and telecommunications: As traditional industries face high levels of disruption and innovative technologies become widely available at a rapid pace, the technology industry will continue to record unprecedented levels of activity and transaction value. At the same time, companies in all industries are seeking to acquire critical technology or digital capabilities.

Mr. George Makripidis, Partner, Head of Corporate Finance, PwC Greece, comments: “In 2021, the Acquisition and Merger activity in Greece was fueled by some of the largest transactions ever made in our country. The protagonists were the green energy sectors, infrastructure, telecommunications, food and new technologies. It seems that this trend will continue in 2022. International developments, which have begun to affect our country, with high prices of raw materials, energy and their impact on inflation, the breakdown of the supply chain due to COVID and finally the interest rate trends, put pressure on business plans and are on everyone’s mind.Creating value from trading in today’s high valuations, taking into account the above factors, begins to occupy decision makers more intensively. as a result, corporate transactions also hope to absorb the pressures, due to the low base on which The economy is still in turmoil after a prolonged period of financial crisis. “This comparative advantage enables target companies to achieve better financial results, and their buyers to trade in today’s volatile environment, achieving high returns.”