Growth & Investments: A New World, Priorities Beyond the Pandemic — Key Takeaways

Despite the pandemic, 2021 saw record-breaking deals across the world. It also ushered in a new era of deal-making that is virtual, thorough and takes new factors into account.

Global M&A Network gathered the following experts to discuss what the future holds for mergers and acquisitions:

• Lami Ajibesin, Managing Director and Leader of Transaction Advisory Services, Anchin, Block & Anchin
• Tosh Kojima, Managing Director, DC Advisory
• Raja Lahiri, Partner, Transaction Advisory & IPO and TMT Leader, Grant Thornton Bharat
• Moderator: Peter Braverman – VP of Global Venue Sales, DFIN Solutions

Watch the full panel discussion, “Growth & Investments: A New World, Priorities Beyond the Pandemic,” above.

Here are five takeaways from the conversation.

Deal-making soared in 2021. Lahiri credits the increase in global M&As to two main factors:

1. Digital and tech transformation: Businesses were long overdue for a digital overhaul, and the events of the last two years have made it necessary. Ajibesin said moving virtual was a roadblock at first, but many businesses have adapted.
2. Growth of private equity: Kojima says early reports indicate that PE constituted 65% of DC Advisory’s deals in the three quarters of 2021. Plus, PE has grown disproportionally over the last 10 years, with corporate M&As remaining mostly flat.

Deals will continue to close virtually. All three of the experts agreed that many deals will continue to close virtually even after the pandemic. However, it’s likely some businesses will create a hybrid virtual and in-person process.

Kojima said many companies he works with in Asia have had to go through fundamental behavioral changes. More businesses are making it to the early stages, since all stakeholders can meet over Zoom instead of configuring flights and travel time.

Due diligence looks different. Either with fewer on-site visits (or none at all), businesses like manufacturing are getting creative. They’re using videos, on-demand site visits using GoPros.

“[Investors] want to walk around, they want to see, you know, rubbish on the floor, they want to look into the recycling bin,” said Kojima.

Your data room isn’t just full of documents anymore. There are lots of multimedia to keep track of to complete due diligence.

ESG is a top priority. Many investors are factoring in environmental, social and governance in their decision-making. Yet there’s still a lot of ambiguity.
“Everybody is trying to figure out a framework,” said Lahiri. “How do you really measure it in metric terms?”

He also pointed out that investors don’t know the tipping point between making the deal or not. But Lahiri thinks those ESG concerns are here to stay, and the industry will figure it out as they go.

Cybersecurity continues to be a concern. Ajibesin says cybersecurity is a big concern for all her clients’ deals.

“What are the tools? What are the strategies that the company is taking into account to prevent cybersecurity issues?” said Ajibesin.

But security concerns aren’t limited to the business’s day-to-day operations. Lahiri points out that sellers are hosting a lot of information on the data room, and they have a responsibility to protect it.

A look ahead for M&As

All three experts agreed that most of the new changes brought by the last two years are here to stay.

As for the coming year? Lahiri put it perfectly: “Hope. Without hope, there is really nothing.”