A recent survey from Aon found that nearly half of dealmakers expect the number of mergers and acquisition (M&A) deals globally to increase somewhat or significantly over the next year or so compared to 2022.
The report from the global brokerage, in partnership with intelligence provider Mergermarket, also found that a further 20% of the 50 senior executives surveyed expected M&A figures to remain with current volumes.
The latest edition of the M&A Risk in Review series covers the first half of 2022, and while it was optimistic on the landscape in the year to follow, Aon warned that the sailing will not be smooth, as there are climate, tax, and cyber risks also on the horizon. M&A strategies will also be tested by market dislocation and geopolitical uncertainty, and as such dealmakers need to be proactive in controlling whatever risks they can.
Further, the study reported that 68% of respondents identified technology, media, and telecom (TMT) as likely to be the most prolific generator of M&A activity over the next year. Conversely, the financial services sector is reported by 32% of those surveyed to be the least prolific sector for dealmaking.
The report also mentioned that 72% of respondents expected financing decisions to worsen compared to the past year, including 38% who expect them to become much more challenging. As a pre-emptive, dealmakers are found to be turning to alternative financing sources for M&A, including private equity, which makes up 64% and non-bank lending at 38%.
Finally, it appears that there is still a huge, cross-industry push for environmental, social, and governance frameworks. 96% of respondents expect ESG scrutiny in deals to increase over the next three years, with 48% saying that it will increase significantly. Environmental is still the top concern out of the three, with 24% saying that litigation for that area creates the most concern in respect of potential disputes in a deal.
“We are excited to share these important market insights that can help shape better decisions as the deal environment continues to evolve and poses new challenges,” Aon M&A and transaction solutions global co-CEO Gary Blitz said. “By taking this broad view of the M&A landscape, dealmakers are better able to understand and respond to critical risks that can have an impact on a deal’s success.”
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