Interview, Fireside Chat
A “Superbloom” in M&A and Separation Activity
- Global M&A and separation activity volumes are projected to surge from pandemic levels, driven by corporate boards reassessing strategic priorities, capital allocation, and portfolio optimization through inorganic growth and pruning.
- Enterprise values are anticipated to reach multiples significantly larger than 2002 or 2009 levels with greater diversification, prompting potential portfolio simplification or "pure playification" in response to disruptive factors like digitization, energy transition, and ESG principles.
- Separation transactions are expected to evolve creatively beyond traditional cash sales, including spinoffs, demergers, U.S. reverse Morris Trusts, and partial carve-outs to enhance tax efficiency, improve metrics, or achieve tax consolidation.
- The macro environment remains highly conducive to activity due to low interest rates, low cost of capital, favorable fiscal policies such as 2017 tax cuts, and post-pandemic travel reopenings facilitating cross-border deal execution.
- Rising U.S. tax rates are considered a likely future scenario that may act as a near-term tailwind, accelerating transaction timelines as corporations seek to finalize deals within the current lower-rate environment.
- Geopolitical trends and regulatory responses present potential headwinds for cross-border M&A, particularly regarding antitrust analysis and approval timelines in the U.S., Europe, and China.
- Transaction activity levels are forecast to persist for the foreseeable future, encompassing domestic and cross-border consolidations, corporate separations, leveraged buyouts (LBOs), and SPAC-type transactions involving capital pools taking public companies private or carving out businesses from PE and VC portfolios.