2021 was a blowout year for M&A

2021 was a blowout year for M&A

2022 could be even bigger – in a KPMG survey, business leaders expect deal making and valuations to rise again.

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2021 was a blowout year for global M&A

Global mergers and acquisition activity in 2021 easily surpassed the pre-pandemic level. And M&A (Mergers and acquisitions) is poised to climb higher in the year ahead. That’s what more than 350 U.S. business leaders told KPMG in a new year end M&A survey. With easy access to capital, low interest rates, and a recovering global economy, deal makers around the world announced $5.1 trillion worth of M&A transactions in 2021, up from $3.8 trillion in 2020 and the highest level since 2015.

More than 80 percent of executives say they expect valuations to rise further in their industries in 2022. More than a third of executives expect valuations to climb by at least 10 percent in 2022.

In the KPMG survey, business leaders say that their appetite for M&A could be limited by several factors in 2022, including high valuations, inflation, and a lack of attractive targets left to buy. Another issue for some investors is the possibility of a rise in the cost of capital and potential tax increases.

M&A patterns in 2022 are likely to be affected by a combination of factors, both macroeconomic and microeconomic. The ones executives expect to have the greatest impact on M&A deal activity are: high valuations (61 percent say so); economic variables, such as overall liquidity (56 percent); fierce competition for a limited number of highly valued targets (55 percent); and supply chain factors (52 percent).

More than half of executives will be looking to acquire entire companies to help diversify their commercial portfolios. Almost 60 percent are seeking access to new products, services and technologies, executives say.

For more information: 2021 was a blowout year for M&A - 2022 could be even bigger (kpmg.us) ■

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