It looks like all bad news if you read the bulletins, but there’s some good news in the world of mergers and acquisitions. 2021 was a record-breaking year for both, and with so many things on the downturn in 2022, you’d be forgiven for thinking mergers and acquisitions were heading the same way, but they’re not. The next twelve months looks like it’ll continue to be great.
In 2021, records were broken by unprecedented levels. As we came out of the pandemic, many people used this as an opportunity to merge their business with another, or to acquire a new company. The number of announced deals was more than 62,000 globally, 24% up from 2020. And businesses weren’t only selling more frequently, but they were selling for higher values than they ever had before. There were a record number of megadeals (where the value of the transaction is $5bn or more), with 130 registered in total. There was a frenzied grab for technology companies and data-driven assets.
2022
It’s unlikely we’ll beat that record in 2022, but the year is going well so far. In fact, the ability of the M&A market to weather the storm of the last few years has been utterly remarkable. Whatever is happening, it seems business perseveres.
In the first half of the year, despite an unstable global economy as a result of the war in Ukraine, global M&A activity reached a value of $2 trillion, spread across 2,274 deals.
Some of the world’s biggest companies are at it. Microsoft merged with Activision Blizzard, Orange with Grupo MásMóvil, and Adobe with Figma.
There’s a strong deals pipeline in place for the rest of this year, and companies across all industries need technological advances. Sure, there are concerns, the interest rate is most concerning and many people might think twice before they do anything that could end in disaster, but it feels as though the desperation to be first is a strong driving force for many companies, and so they’re forging on.
Still, if you’re thinking of merging with another company or acquiring a new one, you should think carefully about the disruption in the global supply chain and increased level of fiscal debt.
Africa
Africa is performing particularly well this year when it comes to mergers and acquisitions. Ther oil and gas upstream sectors reached a new record already in 2022, an incredible $21 billion worth of deals being announced in the last nine months. That’s three times higher than the $7 billion in deals in 2021 and four times more than the $5.5 billion in 2020.
Areas for concern in M&As in 2022
This is not a normal year in many ways. We’re still recovering from the global pandemic, and inflation in many countries is at a forty year high, which means due diligence is more important than it has ever been before. It is vitally important that you engage with professionals if you are considering merging with or acquiring a business, and that you back out at any hint of a red flag or negative feeling in your gut.
You should prioritise workforce strategy, focusing on skill shortages and how you might combat them, and focusing on how diversity and inclusion is already incorporated into any company you are interested in, and what changes – if any – will need to take place in order to achieve it.
Mergers and acquisitions are already complicated, but they are even more complicated this year. We’re not saying you should avoid them, but you should not take risks at this time. Instead, make deals you have done your due diligence on, employ all the experts you can to help you, and give it your very best shot.
Yorkshire Change can help
Most mergers and acquisitions fail even in the best of times, so you want to be extra careful if you’re looking to merge with or acquire a company now. You should pay particular attention to the merging of your IT and other systems, as this seems to be where most people fail at the moment.
A change manager can help you. Change managers will integrate themselves into your organisation and help you effectively manage the change by organising your teams and preparing your departments. They’ll even help you to determine where there might be skills gaps.
If you engage with a change manager early enough in this journey, they can offer you invaluable advice on any companies you might be interested in, determining whether or not it is possible to merge effectively with a company in the first place.
Our dedicated team would love to chat with you about the potential to merge your business with another, or acquire a new company.
To speak to us, please fill in the contact form on our website, or call 0333 090 8710.