M&A Trends and Interesting Times
Great analysis of M&A trends by the Deloitte team. Couple of observations I would make (personally - not representing Deloitte or the M&A Services team).
1. Convergence is an increasing driver of M&A activity. Not just sector convergence but also the convergence of traditionally separate offering types – like services and technology/IP coming together into single offerings that solve particularly complex challenges for clients. These “hybrids” address issues where pure services can no longer compete with the speed, accuracy or scope of technology-driven solutions; but where those technology-driven solutions lack the insight/wisdom of human experts or where they are so complex that they require the same human experts to effectively implement/operate them.
2. Acquiring technology assets is also a growing driver for deals. I suspect this will bring with it a spike in the complexity and challenge of integration and perhaps in the next few years some notable examples of failed deals where the parts never came together.
3. I'm not sure we've seen the full impact of the massive wave of venture investing we've seen in the last 5 years hit the M&A market. My gut says we will see a significant number of "orphan IP" businesses - where further venture funding has become illusive - enter the M&A market. Similarly I think we'll see a number of the deals that were done at frothy valuations or without robust integration and operating plans, turn into an increase in divestitures.
4. And then there’s COVID-19………
It will certainly be - to paraphrase the traditional Chinese curse (https://en.wikipedia.org/wiki/May_you_live_in_interesting_times) - interesting times.
