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Value of M&A and LBO’s

Deal Making

Is the Deal Making over or has it just begun?

The big picture: It depends on how you look at it. Corporate M&A and private equity acquisitions have kind of fallen off a cliff this year, Axios’ Kate Marino writes.

Yes but: For all the uncertainty permeating the markets — not to mention it’s more expensive to fund deals — deal activity is still heading for one of the busiest years on record (though it just won’t top 2021).

State of play: A tremendous amount of uncertainty has entered the market this year — the war in Ukraine, sky-rocketing energy prices, and of course, recession risk.

“In situations of economic uncertainty, the ability to reach an agreement between a buyer and seller about what something will be worth in the future goes down,” Christian Correa, president and CIO of Franklin Mutual Series, tells Axios.

And deal activity has gone down since last year — just check out the chart above.

But, but, but: Precarious times offer opportunities of their own.

“The conversation now is largely around how to take advantage of the situation that is being presented by turbulent markets, and a world where the footing doesn’t feel quite as stable as it has been historically,” says David Harding, an advisory partner at Bain & Company.

Another strategic shift: “Pre-COVID, everything was about finding the next disruption,” and acquiring new business lines, he says. “But we’ve seen a shift back to more scale-oriented [consolidation] deals.”

Axios Markets By Matt Phillips and Emily Peck · Aug 15, 2022

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