The rise of ESG in the M&A process

29 June 2021

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Mergermarket is pleased to present Global dealmakers series 2021 - Deal breakers and opportunity makers: The role of ESG in M&A, published in association with Baker Tilly International.
      
Dealmakers are more focused on ESG than ever before. In large numbers, many confirm that ESG issues are critical both to their own organizations and also to the way they approach potential transactions. Most say they have even walked away from at least one deal on ESG grounds; many say their view on valuation has been materially affected by ESG considerations that have emerged during due diligence.
 
This report dives into the trends around ESG priorities and opportunities as the world emerges from the depths of the pandemic.  
      
Key highlights include:
  • ESG priority: 65% of dealmakers in our survey say ESG is important when considering investments and M&A
  • Positive impact: 52% say their ESG investment strategy has had a positive impact on overall investment returns
  • Deal or no deal: 60% say they have walked away from an investment due to a negative assessment on ESG issues at a potential target
  • New policies: Regulation is the top driver pushing the ESG agenda in most markets as dealmakers adapt to new policy regimes

US M&A: State of Affairs and Outlook Under the Biden-Harris Administration

22 June 2021

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Mergermarket is pleased to present US M&A: State of Affairs and Outlook Under the Biden-Harris Administration, published in association with Pillsbury.
 
Based on a survey of 150 U.S.-based corporate and private equity executives, the results point towards a significant increase in deal volume in 2021. 59% of corporate respondents anticipate closing between 1-3 M&A deals over the next 12 months, and 25% expect to complete four or more. Just 7% reported undertaking that many deals in 2020. Those on the PE side are even more bullish. While one-quarter of private equity-focused respondents say they completed four or more deals in 2020, 56% expect to meet or exceed that threshold in the next 12 months.
 
Key findings include:
  • Respondents largely agree the Biden-Harris administration will have a positive impact on M&A: 64% of corporates and 60% of PE firms surveyed say the administration will be either conducive or very conducive for their dealmaking in the US.
  • The key driver of M&A activity over the next 12 months will be pursuing digital transformation: 24% (the largest such share) of respondents identify this as the most significant factor, and a further 19% cite it as their number-two concern.
  • Rising regulatory scrutiny is by far the most significant risk to respondents’ dealmaking over the next 12 months. 45% identified it as their primary concern, followed—at some distance—by geopolitical concerns/US trade policy (16%) and higher corporate tax rates (13%).

United Notions: Corporate and cultural convergence in life sciences M&A 2021

10 June 2021

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Mergermarket is pleased to present United notions: Corporate and cultural convergence in life sciences M&A 2021, published in association with Mintz.

It's an exciting time for the life sciences industry and the scene looks set for more strong M&A activity in the near term, with 2021 showing robust activity levels. Dealmaking has continued through an exceptionally disruptive period as COVID-19 has shut down economies, kept employees at home and prevented traveling. And while our survey shows that life sciences businesses have faced challenges in getting deals completed and then managing the process of post-transaction integration, the majority of respondents rate the process as having been successful.

The report reflects the sentiment of 100 senior-level US-based executives at life sciences companies on their most recent experience of M&A in the sector.

Key findings include:

  • 60% of respondents believe the Biden administration will be favorable for life sciences dealmaking in the future, including 35% who say it will be very favorable.
  • 48% of respondents acquiring or being acquired say that complete integration into the buyer’s business was the strategy chosen for the deal. This is up significantly from last year, when just 25% said this.
  • This year, the top rationale for buyers’ most recent M&A transaction is to add to or improve their R&D pipeline for reasons other than patent expirations.

Catching the rebound: M&A in Ukraine

20 May 2021

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Mergermarket is pleased to present the sixth edition of M&A in Ukraine, published in association with Aequo. This report provides invaluable insights into key trends in Ukrainian M&A in the face of Covid-19, whilst looking forward to how Ukraine’s economic landscape looks set to develop in 2021 and beyond.

Key findings include:

  • After several years of uninterrupted growth, 2020 saw total disclosed Ukrainian M&A deal value fall to just €171m, the lowest annual total since 2015. Deal volume proved somewhat more robust as investors continued to back smaller deals. Ukraine bore witness to 54 transactions across 2020, higher than that recorded in any year between 2014 and 2017, albeit still a drop from the 87 deals logged in 2019.
  • A fall in foreign investment accounted for a large part of this downturn in dealmaking activity. In 2019, inbound cross-border deals accounted for nearly 90% of overall disclosed deal value, compared to only 51% in 2020. Meanwhile, the country’s largest domestic deal saw the acquisition of Dnipro Hotel by Smartland from the state for a total value of €36m as part of Ukraine’s ongoing privatisation programme.
  • The TMT sector dominated Ukrainian deal activity in 2019-2020, accounting for 21% of volume and 58% of value. This trend looks set to continue as the Covid-19 pandemic has amplified the importance of the technology industry to the global economy, which is a good sign for the country and its prominent IT sector.

1Q21 Global M&A Report with legal league tables

07 April 2021

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Mergermarket, the leading provider of M&A data and intelligence, has released its 1Q21 report which revealed that the first quarter of 2021 reached USD 1.16tn in transactions, surpassing even red-hot 2018 and 2019, making 2021 the most active annual opening on record. Large deal values but fewer deals have led to the highest average deal value since 2006 of USD 518.7m (based on 2,243 deals with disclosed deal values).
 
 
  • Cross-border deals were a significant contributor to overall activity, hitting a record of USD 516.6bn for first quarter activity and nearly returning to historical averages of more than 45% of total deal value. The two largest deals announced in the quarter were cross-border deals that involved US targets: AerCap Holding’s USD 31bn bid for GE Capital Aviation Services and the planned USD 28.6bn merger of Canadian Pacific Railway and Kansas City.
 
  • North America, dominated by the US, reached its highest market share in 14 years netting 54.4% of global deal value, up from 48% in 4Q20. It is a marked turnaround from 2Q20 when North America plunged to 21.5%. North America’s gain came at the expense of all other regions. Save the Middle East, all other global regions lost market share. APAC ex Japan saw its market share decline to 14%, down significantly from its 37.2% share in 2Q20.
 
  • The US was also home to more than two-thirds (USD 137.8bn) of the USD 200.9bn in global IPOs in 1Q21, according to sister product Dealogic. There were 398 IPOs in the US compared to 762 worldwide. Overall, global IPO activity in 1Q21 reached nearly two-thirds of the value of all 2020 activity (USD 319.5bn on 1,592 IPOS).
 
  • Special purpose acquisition companies (SPACs) played a large part in the overall increase in IPO activity and, particularly, in the US. Year-to-date, more than USD 97bn has been raised by 304 SPACs globally, the figures showed. The SPAC surge may take hold in Europe as an increasing number of the specialized vehicles are coming to market. M&A tied to SPACs has also been spiking, with 99 deals totalling USD 219.5bn taking place globally in 1Q21, eclipsing all of 2020, Dealogic data shows. The average deal value for SPAC transactions was USD 2.2bn for the quarter, up from USD 1.2bn in 2020.
 
  • The rising buying power of SPACs may be one factor in the rise of deals in the USD 2bn to USD 5bn range. Such deals have jumped from 19.5% of all deal value in 4Q20 to 23.6%, USD 274bn on 91 deals. Deals greater than USD 5bn in value, which surged in the latter half of 2020, declined in absolute and relative terms. Deals greater than USD 5bn represented more than 44.5% of all deal value in 2H20. In 1Q21, such deals declined to 36.4% (USD 423.4bn on 46 deals).
 
 
Mark Druskoff, Data-Driven Content Coordinator (North America) at Mergermarket commented: “Carrying forward the momentum of 4Q20, global merger and acquisition activity turned in a strong first quarter performance. While many themes crossed over into 2021, such as the technology sector’s dominance and the continued strength of private equity, some notable shifts did occur in terms of deal size and geographic concentration of deals.”
 

1Q21 Global M&A Report with financial league tables

07 April 2021

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Mergermarket, the leading provider of M&A data and intelligence, has released its 1Q21 report which revealed that the first quarter of 2021 reached USD 1.16tn in transactions, surpassing even red-hot 2018 and 2019, making 2021 the most active annual opening on record. Large deal values but fewer deals have led to the highest average deal value since 2006 of USD 518.7m (based on 2,243 deals with disclosed deal values).
 
 
  • Cross-border deals were a significant contributor to overall activity, hitting a record of USD 516.6bn for first quarter activity and nearly returning to historical averages of more than 45% of total deal value. The two largest deals announced in the quarter were cross-border deals that involved US targets: AerCap Holding’s USD 31bn bid for GE Capital Aviation Services and the planned USD 28.6bn merger of Canadian Pacific Railway and Kansas City.
 
  • North America, dominated by the US, reached its highest market share in 14 years netting 54.4% of global deal value, up from 48% in 4Q20. It is a marked turnaround from 2Q20 when North America plunged to 21.5%. North America’s gain came at the expense of all other regions. Save the Middle East, all other global regions lost market share. APAC ex Japan saw its market share decline to 14%, down significantly from its 37.2% share in 2Q20.
 
  • The US was also home to more than two-thirds (USD 137.8bn) of the USD 200.9bn in global IPOs in 1Q21, according to sister product Dealogic. There were 398 IPOs in the US compared to 762 worldwide. Overall, global IPO activity in 1Q21 reached nearly two-thirds of the value of all 2020 activity (USD 319.5bn on 1,592 IPOS).
 
  • Special purpose acquisition companies (SPACs) played a large part in the overall increase in IPO activity and, particularly, in the US. Year-to-date, more than USD 97bn has been raised by 304 SPACs globally, the figures showed. The SPAC surge may take hold in Europe as an increasing number of the specialized vehicles are coming to market. M&A tied to SPACs has also been spiking, with 99 deals totalling USD 219.5bn taking place globally in 1Q21, eclipsing all of 2020, Dealogic data shows. The average deal value for SPAC transactions was USD 2.2bn for the quarter, up from USD 1.2bn in 2020.
 
  • The rising buying power of SPACs may be one factor in the rise of deals in the USD 2bn to USD 5bn range. Such deals have jumped from 19.5% of all deal value in 4Q20 to 23.6%, USD 274bn on 91 deals. Deals greater than USD 5bn in value, which surged in the latter half of 2020, declined in absolute and relative terms. Deals greater than USD 5bn represented more than 44.5% of all deal value in 2H20. In 1Q21, such deals declined to 36.4% (USD 423.4bn on 46 deals).
 
 
Mark Druskoff, Data-Driven Content Coordinator (North America) at Mergermarket commented: “Carrying forward the momentum of 4Q20, global merger and acquisition activity turned in a strong first quarter performance. While many themes crossed over into 2021, such as the technology sector’s dominance and the continued strength of private equity, some notable shifts did occur in terms of deal size and geographic concentration of deals.”

Global dealmakers: Cross-border M&A in 2021

24 March 2021

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Mergermarket and Dealogic are pleased to present Global dealmakers: Cross-border M&A in 2021, published in association with Baker Tilly International.

Global M&A was shaken in 2020, however, the impact of Covid-19 may not have been as bad as expected. Deal activity for Q3 and Q4 were among the highest on record as dealmakers spent their way through the crisis. This unprecedented drive helped propel average deal value above that of 2019, averting a lull and more prolonged recovery similar to that in the post-GFC period. As confidence continues to grow, the question arises: Is it onward and upward in 2021?

This report dives into the trends that drove the global M&A recovery through 2020 while looking to future opportunity sectors and markets that hold promise in 2021.

Key highlights include:               

  • Global recovery: M&A rocketed to new highs in H2 2020, closing 122% higher in value (US$2.5tn) and 5% higher in volume (16,700 deals) from H1.
  • TMT leads: Tech-driven M&A led the charge, with the TMT sector accounting for 36% of deal volume and 31% of deal value in 2020.
  • PE scales new heights: Private equity closed out 2020 with one of its highest years since 2007, accounting for an impressive 23% of total global M&A deal value.
  • Outlook 2021: Low interest rates are creating enthusiasm among various buyers to pursue M&A to expand their businesses, however, current optimism hinges on the effectiveness of vaccine programs around the world and potential rising distress in certain markets and industries.

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Investing in CEE: Inbound M&A report 2020/2021

17 March 2021

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Mergermarket and Mazars are pleased to present Investing in CEE: Inbound M&A report 2020/2021. This report offers an overview of investor activity into the CEE region in 2020, looking ahead to the challenges and opportunities for the coming months.
 
Total deal value in CEE rose by 11% in 2020, to a total of €49.2bn, even as the number of deals dropped by 16% compared to the previous year, to 648 transactions. This impressive performance, in spite of the global pandemic, highlights the enduring appeal of the region for investors interested in big-ticket deals.
 
Key highlights include:
 
  • CEE continues to attract a strong and steady flow of inbound investment. International buyers continue to be attracted to the region, accounting for 49% of total deal value – investing €23.9bn – in line with previous years. Meanwhile, cross-border transactions within the region grew to account for 13% of overall value, up from 6% in 2019 – the highest level in the past five years.
  • Private equity (PE) activity flourished amidst the pandemic. PE remained extremely active in 2020, with total disclosed buyout value in the region seeing a 40% year-on-year rise to €3.9bn. PE exits also fared well, with total disclosed value coming to €8.1bn, a 11% rise on 2019.
  • Four countries continue to dominate the market. The top four countries in deal value terms remained the same as in 2019 – Russia, Poland, the Czech Republic, and Austria. The region’s biggest market, Russia, accounted for four of the year’s ten largest transactions. Meanwhile, the biggest deal of the year took place in Austria, the most affluent of the CEE markets. This deal saw Austrian oil company OMV increase its stake in petrochemicals company Borealis from 36% to 75% for €5.712bn.
  • Looking forward, CEE is well-placed to be one of the global centres for M&A. Having weathered 2020 so well, investors are likely to continue looking towards CEE as the global dealmaking environment stabilises.

Creative Deal Structures: Energizing the M&A Market Post-Crisis

10 March 2021

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Mergermarket is pleased to present Creative Deal Structures: Energizing the M&A Market Post-Crisis, published in association with Sidley Austin LLP.

Creative structures have become increasingly important in bridging the gap between sellers’ expectations and buyers’ willingness to pay. Based on interviews with 150 respondents from US corporates and private equity firms, this report analyzes the ways in which M&A is moving forward in spite of the pandemic.

Key findings from this report:

  • 63% of respondents who use alternative structures say more of their recent deals have incorporated such mechanisms than has historically been the case. Among private equity firms, the figure was 68%.
  • The proportion of private equity firms expecting to be involved in SPAC-related transactions is significantly higher (69%) than among corporates (31%).
  • Among respondents likely to use alternative deal structures, energy, mining & utilities and industrials & chemicals were the sectors where they expected the most use.

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