North America’s M&A Market Forges Ahead
The region is cashing in on a prosperous M&A market.
13 September 2021
North America continues to experience a strong mergers and acquisitions (M&A) pipeline with record quarter-over-quarter growth as the momentum that started in the second half of 2020 doesn’t appear to be slowing down.
Low interest rates, strategics (especially those that thrived in the pandemic) and private equity (PE) firms stocked with cash are the key factors driving deal flow. This, along with confidence that the economic rebound will continue, has led to a “perfect storm” for deal making.
Sectors to watch in North America, for the short term, are Insurance and PMB (Pharma, Medical and Biotech). For the longer term, Power and Renewables are showing the most promise.
Valuations are increasing globally — and continue to be high regardless of where the asset is located. Low interest rates and strong debt markets make the financing of these types of transactions more feasible.
Cautious optimism abounds
The capital markets continue to be primed for a steady stream of traditional IPOs in the second half of 2021. However, increased visibility by the Securities and Exchange Commission — and greater scrutiny on SPAC IPOs — may result in greater difficulty in getting these transactions off the ground.
The mood for the foreseeable future of North America M&A is a general feeling of cautious optimism, along with a mad rush to close as many deals as possible in this dealmaking environment. For the next six months at least, barring any unforeseen events or a significant resurgence of the pandemic, clients expect the M&A market to remain strong.
Growth isn’t without its challenges. Concerns brewing about the Delta variant of COVID-19 are driving some fear of the unknown. Other factors may also impact M&A today and in the not-too-distant future: indication of rising interest rates and the Biden Administration’s focus on antitrust practices. This is evident in the recent call-off of the merger between Aon and Willis Towers Watson, which would have created the world’s largest insurance broker.
In addition, the administration’s heightened interest in deals that could be a risk to national security may impact inbound investments from non-U.S. entities, most notably in the Aerospace & Defense, Utilities and Technology industries.
We discuss these M&A trends in more depth in the SS&C Intralinks Deal Flow Predictor for Q4 2021. The report is independently verified as a highly accurate six-month forecast of M&A activity by tracking early-stage transactions globally that are in preparation or have begun due diligence.
Jon Waters is a vice president of sales for Intralinks. He has more than 12 years of experience working with the dealmaking community as they transform their organizations through strategic transactions.