According to the report, last year's resurgence of M&A activity can be maintained, albeit not at the record levels seen in 2021, with dealmakers looking forward to future transactions as they seek opportunities amid recovering global growth and pursue digital transformation. The outlook for M&A in sectors such as Technology, Media, and Telecom (TMT) and in the Asia Pacific region is particularly promising.
"Even after a period of record M&A activity, dealmakers still maintain a healthy pipeline with cash at unprecedented levels," said Alistair Lester, global co-CEO of Aon's M&A and Transaction Solutions. "However, they are confronted with significant headwinds and new forms of volatility, such as geopolitical uncertainty driving inflation and interest rate increases, the acceleration of the digital economy, a constantly changing tax landscape, sophisticated cyber threats, increased scrutiny of environmental, social, and governance programs, and a challenging talent market that puts pressure on people programs and integration."
Aon's global co-CEO of M&A and Transaction Solutions, Gary Blitz, added, "In today's environment, it is critical for both strategic and private equity dealmakers to take a broad perspective in order to reduce exposures and make better decisions when dealing with financial, tax, legal, and other risks. Dealmakers are encouraged to look for opportunities to secure their assets and increase their returns throughout the deal lifecycle, as well as investigate how transactional insurance solutions can help improve transaction structures and remove certain contingencies for buyers and sellers."
Trends and priorities for investors navigating uncertainties related to geopolitics, government regulation, and COVID-19 pandemic-related disruptions are emerging, ranging from increased investment in technology and financial due diligence to the growing prominence of Environmental, Social, and Governance (ESG) standards. M&A Risk in Review delves into these dynamics, reporting on investors' expectations for global M&A over the next 12 months, standout sectors, key risks they see – and how to best mitigate them.
Among the report's other findings are:
- In terms of expected dealmaking over the next 12 months, TMT is cited by 70% of respondents as the most prolific sector. On the other end of the spectrum, 54% believe M&A will be the least active in the energy, mining, and utilities (EMU) sector.
- The majority of respondents (54 percent) see Asia Pacific (excluding Japan) as the most appealing region for M&A over the next 12 months. A little more than a third (34%) name North America as the most appealing region for M&A overall, with another 32 percent naming it the second most appealing.
- Over the next three years, the vast majority of respondents (90%) predict an increase in deal scrutiny for ESG implications; nearly half (48%) believe the increase will be significant.
The full report can be found here.