Respondents to Dykema’s 17th annual M&A Outlook Survey believe nothing will break the stride of US M&A dealmakers over the year to come, with most viewing the Biden administration’s legislative agenda as positively impacting activity.
A resounding 75 percent of respondents expect the US M&A market will strengthen in the next 12 months, while only 7 percent anticipate it will weaken. Respondents not only predict deal volumes will be up across the board, from small to mid-market to mega-deals of USD1 billion and more, but 9 out of 10 also expect M&A activity among privately owned businesses to increase over the next year.
“For us, the optimism comes as no surprise,” says Thomas Vaughn, co-leader of Dykema’s Mergers & Acquisitions practice. “The top three factors cited as fueling current M&A activity – availability of capital, financial markets and general economic conditions – support the notion that all the fundamentals needed for a bull market are there. All of this coincides with recent data showing this year’s M&A activity is on pace to be the biggest in history.”
The survey polled senior executives and advisors across the nation: CEOs, CFOs, owners, managing directors and other professionals involved in M&A activity. When asked about leading concerns regarding M&A in the next year, respondents said the pandemic still ranks as a top challenge, with 49 per cent citing it as a significant obstacle to M&A in the next 12 months.
“This might stem from ongoing supply chain and labor shortage issues associated with the pandemic as well as the general, but persistent, uncertainty it brings,” says Jeff Gifford, leader of Dykema’s Corporate Finance practice group. “That said, now even after the surge in cases, dealmakers have learned how to manage Covid-19-related uncertainties, with respondents ranking Covid-19-related delays sixth in order of the most common obstacles they experienced in deal-making last year.”
In a departure from Dykema’s 2020 M&A Outlook Survey, the vast majority of respondents believe the implementation of Biden’s policies will have a positive impact on the US M&A market in 2022. Respondents do not believe that even issues such as heightened antitrust scrutiny and corporate tax increases, generally considered hostile to the M&A market, can slow down the US M&A market in the next year.