The report suggests that last year’s resurgence of M&A activity can be sustained, albeit perhaps not at the record levels seen in 2021, according tom the latest edition of Aon’s global M&A Risk in Review report.
Dealmakers are looking forward to future transactions as they seek opportunities amid recovering global growth and pursue digital transformation.
The outlook is particularly strong for M&A in the Technology, Media and Telecom (TMT) sector, with almost three-quarters of respondents (70%) citing TMT as the most prolific sector in terms of expected dealmaking over the next 12 months – by far the largest share. This was well ahead of the pharma, medical and biotech (PMB) sector, at 44%.
At the other end of the spectrum, 54% of respondents believe M&A will be least active in the energy, mining and utilities (EMU) space, reflecting the challenges around reduced demand for raw materials and commodity market volatility.
From increased investment in technology and financial due diligence to the growing prominence of Environmental, Social and Governance (ESG) standards, trends and priorities are emerging for investors who are trying to navigate uncertainties related to geopolitics, government regulation and Covid-19 pandemic-related disruptions. The report reveals that more than half of dealmakers (54%) fear the impact of geopolitical uncertainty.
European M&A is more likely to be significantly impacted than dealmaking in other markets, but sentiment worldwide will be affected.
Other risks are also coming to the fore, including market dislocation or disruption (50%), macroeconomic picture (34%), legislative/regulatory risk (28%) and technology/cyber risk (26%). On the upside, just 26% cite the COVID-19 pandemic as one of the three most significant risks their organisation will face over the next 12 months.
From climate change risk to social issues, ESG considerations will continue to play a role in every M&A transaction. Notably, 90% of respondents predict an increase in scrutiny of deals for ESG implications over the next three years, with almost half (48%) believing the increase will be significant.
When it comes to regulation, 42% of dealmakers cite environmental issues as a concern. Alongside ESG, there is also a need for dealmakers to navigate issues such as supply chain risk and securing data and information during investment processes.
