2022 M&A Outlook: The Good Keeps Going

Signs point to another strong year for M&A

By all accounts, it was a banner year for M&A in 2021. All-time records were smashed, with global value surpassing $5 trillion for the very first time. Do we believe that hot streak will continue? Or will we find ourselves in a ’what comes up, must go down’ situation? We feel strongly that 2022 is going to be another good year. Below is a snapshot of some of the accelerating factors.

Tax concern carryover

The specter of the Biden administration skyrocketing capital gains taxes put dealmaking into overdrive in2021. And while some of those fears have cooled, sellers are still trying to outpace potential tax changes while buyer demand remains high. We feel the looming potential of tax increases will cause many sellers to bring companies to market ahead of schedule.

Public stock market volatility drives M&A

A volatile stock market creates concerns for potential sellers that prices may decline based on a decline or correction in the capital markets. This can create a sense of urgency for sellers to act now so that they don’t miss the M&A window.

Deals on deck

A high volume of pitches from Q3 and Q4 of 2021 will all come to market in late Q1 and Q2 of this year, giving 2022 a tremendous head-start towards success.

High confidence

U.S. consumer confidence continued to improve through January 2022, suggesting the economy will continue to expand in 2022 despite being locked in a never-ending pandemic. 

More cash on hand

Companies are looking for ways to put the large amounts of cash they have raised during the pandemic to work. Private equity firms have replenished their coffers, particularly in the tech and healthcare sectors, and continue to have record cash levels at their disposal.

Political worries

Regulatory pressure is sure to rise in a mid-term election year. Dealmakers are not sitting around waiting for the possibility of new, more restrictive regulations or laws to come on the books. They’re making deals now.

These are just some of the many factors in 2022 that we believe will lead to another big year for M&A’s with every year, news, events and circumstances can alter the trajectory, so watch this space for updates as the year unfolds.