M&A Trends and Developments 2022

Through the first three quarters of 2021, global M&A continued at a record setting pace with North America and Europe leading the way. For the first three quarters of 2021 there were approximately 27,000 M&A deals closed at a value reaching $3.4 trillion. Buyers are being aggressive as a result of cheap financing, an abundance of cash, a new wave of IPO’s and financial markets that are up close to 30% over the last twelve months, not to mention the $1.5 trillion currently held by PE funds that will most likely be deployed in the short term. A predictable trend has seen more public company buyers become emboldened due to excess cash from IPO’s and high stock prices which allows pubco buyers to use stock as currency in M&A deals. In fact, approximately 50% of M&A deals involve a combination of cash and stock, up from 40% a year ago.   Information technology, health care and financial services are the industries where the most M&A activity has occurred.  The continued growth and acceptance of cryptocurrency and block-chain technology should propel the financial services M&A activity for the foreseeable future. 

All of this good news comes with a downside. As expected, with buyers paying ever increasing multiples and purchase price we have seen an uptick in claims stemming from M&A deals gone bad.  Not surprisingly the industries that are the hottest have seen the most claims with the IT sector, health care and manufacturing topping the list. Perhaps a more interesting data point is the type of claims being asserted: EBITDA disputes, tax claims, permit problems, classification of employees, billing and coding problems, and cyber related issues.  Another downside for sellers is that liability caps and baskets trending upwards. As 2022 unfolds we will probably continue to see buyers, especially PE and institutional buyers, look to streamline their M&A process which makes customization and deal specific items difficult to negotiate for sellers.

For practitioners, it will become more important than ever for M&A counsel to understand restricted stock issues for public companies, as well as continuing to expand one's knowledge of business, accounting and legal issues associated with the recent trends in M&A deals.

Dennis O'Rourke and Tina Kassangana of Moritt Hock & Hamrock LLP will provide an update on legal and practice developments for M&A practitioners, and Matthew Hull, Managing Director at Bruderman Brothers, will provide the Investment Banker's take on the M&A market. Moderated by David R. Lallouz, Chair of the Business Law Section's M&A Committee, and Head of M&A and Chief Legal Officer at Bruderman & Co.