Companies conducted 1,047 mergers and acquisitions (M&As) in 2021, according to a report from consultancy Willis Towers Watson (WTW). WTW's data is based on deals with a valuation of $100 million or more.
It was the largest number of deals on record since WTW began tracking M&As in 2008. It was also a 55% increase in deals from 2020, when there were only 674 M&As globally.
“The M&A boom looks set to continue—fueled by abundant investment capital, strong equity markets and cheap debt,” Duncan Smithson, senior director at WTW, told The New York Post.
Carbon Footprint, Talent
Another factor that might drive M&As this year could be companies looking for partners to improve their carbon footprint, i.e. to be seen as “greener” to customers, partners and investors.
Yet another reason why a company to acquire another is the need to find talent in this time of the so-called “Great Resignation,” which shows no signs of slowing down.
The upside of these mergers and acquisitions needs to be weighed by investors and companies driving the deals, WTW warns; stock returns of companies that engaged in M&As in 2021 outperformed companies that did not go through M&As, by a mere 1.4 percentage points.
Smithson also notes that parties engaging in M&As may be more discerning in 2022: “Deal speed, preparation and quality due diligence will be essential if deal makers’ expectations are to be met,” he tells the NYP. M&A deal makers will also be running the numbers more carefully to make sure they are not overpaying, he adds: “The question is whether prices being paid now will continue to make sense over time.”
© 2022 Newsmax Finance. All rights reserved.