Beyond the Mergers and Acquisitions Headlines

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In this article, Jeffery Perry writes about frothy mergers and acquisitions, synergy expectations, and integrations.

Despite the business challenges of the global pandemic, global mergers and acquisitions (M&A) activity in 2021 has been at record levels across sectors. For corporations, private equity (PE) firms, and special purpose acquisition companies (SPACs), when M&A deals happen, headlines rightfully focus on valuations and strategic rationale. For corporate combinations and PE rollups, synergy expectations and integration approaches garner a great deal of attention as well. However, for M&A to be fully successful, there is a need to navigate through a series of unsung risks, most notably the internal controls environment of the acquired entity. Unchecked controls can negatively impact the achievement of goals and objectives that grab headlines and attention. 

According to Bloomberg, global M&A deal value through three quarters of 2021 reached $4.28 trillion, exceeding the all-time annual record of $3.96 trillion set in 2015. There has been robust activity across sectors including technology, healthcare, financial services, media, energy, and manufacturing. Corporations have led the way, representing 60% of deal value, followed by PE at 32%, and emerging SPACs at 8%. Going forward, there appears to be a strong pipeline of M&A potential through the remainder of 2021, leading into 2022. While supply chain disruptions, inflation, and labor shortages may put a damper on some M&A activity, this has yet to materialize. Buyers thus far have managed to “walk and chew gum” as they pursue deals.

 

Key points include:

  • Synergy expectations
  • Integration approaches
  • The internal controls environment

 

Read the full article, Beyond M&A Flash, Winners Manage Unsung Risks, on LeadMandates.com.