Bain & Company recently surveyed 281 M&A executives for their fourth annual M&A report. Here’s a quick overview of some of the findings that caught my eye:

2021 Valuations Set a Record

According to the report, “The year 2021 was a record-breaking year for M&A deal valuations as corporate dealmakers raced to acquire transformative capabilities.” In 2021, deal valuations exceeded expectations and reached $5.9 trillion.

“Companies are using M&A to keep pace with the trends transforming their industries, many of which were accelerated by Covid-19,” noted Andrei Vorobyov, a partner in Bain & Company’s Mergers & Acquisitions practice in a press release about the report. Intense competition and rising prices also affected 2021 M&A activity and valuations.

Factors Critical to Successful Deals in 2022

The report predicts that dealmakers that come out ahead in 2022 will be those who pay attention to opportunities from talent retention, revenue synergies, and ESG (Environmental, Society, and Corporate Governance).

1. Employee Retention

In the Bain survey, 38% of the respondents said retaining employees was critical to the success of a deal. But retaining key employees after an acquisition is especially difficult this year, as more employees resign to seek more rewarding opportunities elsewhere.

2.Revenue Synergies

The Bain survey revealed two key reasons that 2021 deals failed to achieve the revenue boosts dealmakers had expected. The post-acquisition transition team 1) failed to integrate product portfolios; and (2) failed to transform and integrate go-to-market strategies.

In 2022, dealmakers should be better prepared for post-sale transitions in order to achieve the potential revenue synergies that lead to high-valuation acquisitions.

3.ESG

According to Bain’s survey, only 11% of acquirers assess the target’s ESG improvements during the M&A process. However, 65% expect their company’s focus on ESG to increase over the next 3 years.

Bain analysts believe ESG activities increase value and are becoming a business imperative.

4.Partnerships

Frequent acquirers regard strategic partnerships as a critical part of the M&A and growth strategies.

5.Corporate Venture Capital (CVC)

The value of CVC-backed deals has risen dramatically. Globally, CVC-backed deals now make up one-fifth of total investment value.

For More Information

The Bain study captured my attention because many of the trends happening globally are also underway within the label converting and specialty printing companies that I work with. Call me at 561-543-2323 and we can discuss some of these trends in more detail.

For more information about these 2022 global M&A mega-trends, I recommend reading some of Bain & Company’s research. Click on the links below.

RECOMMENDED READING

M&A Report 2022: What the Best Companies Did to Win in a White-Hot Market
M&A Is Back: 2021 Saw the Highest M&A Deal Value in History
Infographic: Winning in Today’s White Hot M&A Market