A hot M&A market should get even hotter in the coming year, according to the results of law firm Dykema Gossett PLLC’s latest annual M&A outlook survey.
A “resounding” number of the 266 M&A professionals and advisers that Dykema surveyed in September said they expect the U.S. market to strengthen in 2022. Higher deal flow will occur across the board, from small and mid-market transactions to deals valued at $1 billion or more, survey respondents forecast.
“The jury is in: In the year to come, it looks like nothing — not the latest surge in COVID-19 cases, the Biden administration’s legislative agenda or economic uncertainties — will be able to break the stride of M&A dealmakers,” according to the 2022 outlook.
The “bullish outlook is particularly strong for privately owned businesses,” according to Dykema. Nine out of 10 survey respondents expect more deals next year involving privately owned companies.
An increasing number of respondents — seven out of 10 — also hold a positive outlook on the U.S. economy over the next year compared to last year’s survey.
“For us, the optimism comes as no surprise,” said Thomas Vaughn, co-leader of Dykema’s Mergers & Acquisitions practice in the firm’s Detroit office. “The top three factors cited as fueling current M&A activity — availability of capital, financial markets and general economic conditions — support the notion that all the fundamentals needed for a bull market are there. All of this coincides with recent data showing this year’s M&A activity is on pace to be the biggest in history.”
Automotive, energy, financial services, technology and media, and health care rank as the top five most-active sectors for next year. The automotive industry ranked as the top sector for anticipated M&A activity for the fourth straight year. Energy, cited as the second the most-active sector, moved up from eighth in last year’s survey.
Dykema noted that despite concerns over federal tax policies and heightened antitrust scrutiny of deals, survey respondents view the Biden administration more favorably today than they did a year ago leading up to the 2020 presidential election.
“In 2021, the new presidential administration is seen as broadly beneficial for M&A, or at the very least unlikely to impede the bustling momentum,” according to the outlook.