M&A Hit Highs Last Year. 2022 Could Be Even Bigger.

“The trends we are seeing in this very active market indicate that we are just at the start of the next M&A run,” said Deloitte’s Trevear Thomas.

Michael Nagle/Bloomberg

Michael Nagle/Bloomberg

Mergers and acquisition activity will be “more, bigger, [and] different” in 2022, according to a Deloitte survey published Wednesday.

From August 26 to September 7, 2021, Deloitte polled 1,300 executives at corporations and private equity firms about their expectations for deal activity and overall M&A activity in 2022. Following a strong year of steadily increasing M&A activity in 2021, 92 percent of survey respondents said they expect deal volume to increase or stay the same in the coming year.

“The trends we are seeing in this very active market indicate that we are just at the start of the next M&A run,” said Trevear Thomas, U.S. leader for M&A and restructuring services at Deloitte, in the accompanying report.

M&A activity also encompasses divestitures, which usually involve a firm hiving off a business unit that’s no longer considered to be core after a merger or acquisition. Alongside positive M&A expectations, respondents expect divestitures to continue to dominate in 2022 — 57 percent of corporate respondents said they have engaged in a divestiture in the past year, and 32 percent said they are considering one in 2022.

In 2021, companies in the technology, media, and telecommunications (TMT) sector conducted the greatest number of divestitures. Sixty-one percent of TMT respondents indicated that they had completed at least one divestiture in the previous 12 months, the most of any industry surveyed.

Moving into 2022, survey respondents said that the industries that are the most likely to contemplate possible divestitures, but that haven’t done so yet, are the financial services industry and the energy, resources, and industrials sector. “Industries are converting more than ever, and companies are continuously evaluating their portfolios to align with their long-term strategy, while established dealmakers continue to shed non-core assets that drive operation complexity,” the survey said.


For private equity firms that use strategic sales as their primary way to exit the market, the past year marked a shift. From 2019 to 2021, the percentage of respondents who said they expected strategic sales to be the primary form of portfolio exits over the following 12 months decreased by 15 percentage points. Conversely, the percentage of respondents who said they expect the primary form to be sales to another private equity firm or an initial public offering both increased over the same period.

“This shift from strategic sales to a sale to another PE [or to an IPO] isn’t surprising, given the increased amounts of dry powder held by the private equity funds and hot IPO market,” said Brian Kunisch, a partner at Deloitte & Touche, in the survey report.

As for the regulatory environment, respondents believe that increased stringency will lead to more M&A dealmaking, not less. For example, 54 percent of respondents said they believe that a “tightening” regulatory environment will result in more deal activity in 2022. Deloitte said that this can be attributed in part to a “beat-the-clock” mentality among dealmakers who are rushing to conduct M&A before regulations make the transactions more difficult to execute.

Corporate executives also appear to be interested in experimenting with alternative M&A approaches in 2020, including strategic alliances, partnerships, joint ventures, and special purpose acquisition companies (SPACs). From 2019 to 2021, for example, the total number of closed SPAC deals increased from 32 to 174, and 45 percent of respondents said they expect SPACs to become more popular in 2022. “The survey results are surprising,” said Jeff Bergner, a partner at Deloitte, in the report. “I expect SPAC IPOs to slow down, but the rush for existing SPACs to find a deal will continue.”

For survey respondents, the biggest challenges facing M&A execution in the coming year are the competitive deal environment, the difficulty of translating strategic business needs into an M&A strategy, and the need to adapt to the “limits of operating models and current structures,” the survey said.

The report concluded that in an attempt to implement a framework that will “change the game,” execs will embrace “offensive” M&A strategies in 2022, rather than simply playing it safe in an effort to maintain competitive parity. In short, they’ll be willing to take on some more risk this year.