M&A deal value skyrocketed in 2021, eclipsing all previous records by a long shot. Companies must take steps to bolster their capabilities and meet the market's rising demands. Suzanne Kumar, vice president of Bain’s M&A and Divestitures practice, and Andrei Vorobyov, a partner with the practice, discuss the complex trends of the past year—and how business leaders can compete in 2022.
As markets take off, strategic acquirers are evolving to meet new challenges.
Read a transcript of the video below:
SUZANNE KUMAR: 2021 was a white-hot year for dealmaking, and M&A has become more complex than ever. Financial investors, SPACs, and venture capital experienced tremendous growth.
ANDREI VOROBYOV: Strategic M&A also had a remarkable year. Deal value was up almost 50%, while record-high valuations raised the bar for success.
KUMAR: Alternative deal activity also dramatically increased, as strategic buyers pursued more joint ventures, partnerships, and corporate venture capital than ever before.
VOROBYOV: In reversal of recent trends, scale deals were more common than scope, likely reflecting buyers' focus on strengthening core businesses and taking advantage of opportunities in the market.
KUMAR: Of course, the question is: Can M&A continue at this pace? Bain's overall outlook is optimistic. The fundamentals for dealmaking are still attractive. A well-balanced mix of market signals suggests momentum is not slowing down. And in order to compete, strategic M&A teams will need to expand their toolkit.
VOROBYOV: They'll need to elevate talent. Talent is a critical success factor for deals. And today's hot labor market requires a new focus on retention challenges.
KUMAR: They'll need to better identify, quantify, and capture revenue synergies to justify record-high deal multiples.
VOROBYOV: They'll need to broaden their M&A playbook to account for new business needs. Alternative deals, such as JVs, require a distinct approach. Meanwhile, ESG is quickly rising in importance to dealmaking, and as a potential source of value.
KUMAR: Today's buyers face an M&A environment that demands more from them than ever. Our latest report shows that, even in today's complex market, dealmakers can meet these challenges, and get M&A right.
What the best companies did to win in a white-hot market.