‘We expect investors to look through short-term business disruption and for cross-border deal flow to return to pre-pandemic levels by the end of 2022.’
Tihir Sarkar, Cleary Gottlieb
Global 100 leaders and corporate stars give their prognosis on how the deal market will shape up in 2022
More of the same
‘Some of the big US funds who don’t have operations here have become more active in Europe and equally, going the other way, some of the very large European funds are much more active in the US. All the indications are the pipeline and the deal environment into next year will continue to be strong.
We’ll see a lot of deals in fintech and healthcare and we’ll see an increasing convergence of the growth market. Venture capital and emerging company growth deals will get bigger and bigger and we’ll see an increasing convergence with traditional buy-out funds.’
David Walker, global vice chair of corporate, Latham & Watkins
Benefits of restructuring
‘The next six months will probably continue much like the last six months. With the wide availability of vaccines, we are now fully reopened in every office around the globe, I think there will be a sense of moving forward and emerging from the pandemic and the clients are going to have a similar path. You can see the financial restructuring market picking up in 2022 as companies assess how they want to move forward and may see a restructuring as advantageous. The regulatory environment is going to continue to have a very significant impact on client needs.’
Kim Koopersmith, chair, Akin Gump
Alternative energy
‘The energy transition sector, clean tech, renew-tech, or just energy is going to be huge and will impact investments into existing industries like windfarms and solar farms. There’s also been quite a few SPACs that have been listed that want to buy businesses in the climate change transition space.
There’s a huge amount of venture financing available for these businesses as well as venture financing from oil and gas companies. Oil majors have set up in-house venture capital financing businesses and they’re investing in carbon capture and other things. Post-COP26 we’re already starting to see early moves on that.’
Sam Newhouse, corporate partner, Latham & Watkins
Strategic investment
‘The investment activity drives more upstairs fundraising for funds realising there are great businesses out there, and if they didn’t have a technology-focused fund, they’re looking at having one. There have been some interesting infrastructure businesses moving around. Those investment houses are becoming more strategic about what they want to do and all those funds every year are getting bigger. A lot of capital is being deployed which forces, in a good sense, more investment at the top end.’
Gemma Roberts, London co-chair, Goodwin
Dry powder
‘As we enter 2022, we expect investors to look through short-term business disruption and for cross-border deal flow to return to pre-pandemic levels by the end of 2022, depending on the impact of Omicron. PE still has a lot of dry powder so that will inevitably lead to greater competition and therefore higher asset prices. There’s likely to be a focus among publicly listed companies across Europe, particularly if undervalued. Tech and healthcare, as well as the subdivisions within them, we expect to remain very attractive to dealmakers. However, we do expect to see an ever-increasing variety of hurdles to deals getting done. This could take the form of antitrust agency intervention or increased scrutiny around foreign investment. Finally, ESG issues are only going to become more paramount in any deal as investor and public perception increases.’
Tihir Sarkar, M&A partner, Cleary Gottlieb
More to come
‘The private equity firms have had huge funds raised they haven’t deployed fully. Last year was a “wait and see” because of the pandemic – who would be the winners and losers? But it’s very different from the global financial crisis when the banks had no money and therefore they stopped lending. The banks do have money, and they have been punting it out of the door under the various Covid loan schemes. But they also have capital to finance other transactions. Since the financial crisis we’ve had a huge uptick in the amount of private credit available, and we have a very active private capital practice acting for those funds on the lender side and equity side. They’ve got huge funds being deployed.’
Penny Angell, UK managing partner, Hogan Lovells
No fear
‘There is a large core of repeat entrepreneurs and repeat investors who are onto fund six or seven and really do know a lot about what success looks like. Some of that has come through the internationalisation of capital – there’s a lot of American money – and they’ve built this knowledge base. There is no fear of doing a deal in the UK or Europe now. There is a large element of risk in backing a tech or life sciences company, but everyone feels a lot more mature. As a consequence, the volume of deals keeps going up.’
David Mardle, tech and life sciences partner, Goodwin
Cash is king
‘It’s been a very strong year in both the UK and globally for corporate activity. There’s a lot of opportunities out there at the moment and a lot of liquidity. People have cash and they are looking to use that cash. It’s a very good time now to look for different opportunities and build your business. It’ll be interesting to see when that cycle changes. There’s less bankruptcy and restructuring work than in other cycles because of the support schemes, but when does that start turning? We’re keeping an eye on that.’
James Doyle, head of global corporate and finance, Hogan Lovells