The Post-Covid M&A Sea of Opportunities

With a total deal value of $5.9 trillion, 2021 has broken records for merger and acquisition activity. In the first quarter of 2022, share prices are buoyant, capital is cheap, and SPACs are one of the year’s hottest business trends.  

While mega-deals like the WarnerMedia-Discovery merger, or Amazon’s acquisition of MGM, have received most of the headlines, these are just the most notable examples of an unprecedented rearranging of capital across companies at all levels.

Creative Destruction:

Covid-19 was the biggest jolt to the world economy since the Second World War. It has unleashed a wave of creative destruction, destroying old markets and creating new ones, bringing down previously untouchable incumbents and clearing space for new companies to grow. 

This transition will entail the transfer of trillions of dollars to more productive uses. A new economy and an altered competitive landscape are bringing once-in-a-generation opportunities for those with the vision to see them.

New Economic Structures Mean New Synergies:

The pandemic has reformulated supply chains and business relationships. Companies are looking for greater resilience in their systems, which often requires de-globalisation and the increased use of local partners. 

Rather than use distant suppliers and service providers, companies are choosing to fulfill orders domestically wherever feasible. These changes are a huge driver of new synergies and efficiency gains; as business relationships change, so do ownership structures, with multiple consolidation opportunities emerging along updated supply chains. 

At the same time, many companies are pivoting to new business models, or looking to streamline around a core focus. 

This combination of factors has led to a uniquely dynamic M&A market requiring fast-paced commercial due diligence (CDD). Future-shaping opportunities are available at every turn. No one knows what the next decade will bring, but what’s for sure is that it’s being built right now.