Aon/Mergermarket M&A study finds reasons for optimism but headwinds persist

Aon plc (NYSE: AON), a leading global professional services firm, and Mergermarket, a provider of intelligence, data and analysis of global M&A, today released the latest edition of their global M&A Risk in Review report.

The report suggests that last year's resurgence of M&A activity can be somewhat sustained, albeit perhaps not at the record levels seen in 2021, with dealmakers looking forward to future transactions as they seek opportunities amid recovering global growth and pursue digital transformation. The outlook is particularly strong for M&A in sectors such as Technology, Media and Telecom (TMT) and in the Asia Pacific region.

"Even after the recent intense period of record M&A activity, dealmakers still maintain a healthy pipeline with cash at unprecedented levels," said Alistair Lester, global co-CEO of M&A and Transaction Solutions at Aon. "They are, however, faced with serious headwinds and new forms of volatility including geopolitical uncertainty driving inflation and interest rate increases, the acceleration of the digital economy, a constantly changing tax landscape, sophisticated cyber threats, heightened scrutiny of environmental, social and governance programs and a challenging talent market that puts pressure on people programs and integration."

Gary Blitz, global co-CEO of M&A and Transaction Solutions at Aon, added, "In today's environment, it is critical for both strategic and private equity dealmakers to take a wide view to mitigate exposures and make better decisions when approaching financial, tax, legal and other risks. Dealmakers are encouraged to identify opportunities throughout the deal lifecycle to secure their assets and enhance their returns as well as examine how transactional insurance solutions can help improve transaction structures and take certain contingencies off the table for buyers and sellers."

From increased investment in technology and financial due diligence to the growing prominence of Environmental, Social and Governance (ESG) standards, trends and priorities are emerging for investors trying to navigate uncertainties related to, among others, geopolitics, government regulation and COVID-19 pandemic-related disruptions. M&A Risk in Review explores these dynamics in detail, reporting on investors' expectations for global M&A over the next 12 months, standout sectors, the key risks they see – and how best to mitigate them.

Additional findings from the report include:

• Seventy percent of respondents cite TMT as the most prolific sector in terms of expected dealmaking over the next 12 months. At the other end of the spectrum, 54 percent believe M&A will be least prolific in the energy, mining and utilities (EMU) space.
• Most respondents (54 percent) identify Asia Pacific (excluding Japan) as the single most attractive region for M&A over the next 12 months. Just over a third (34 percent) single out North America, with a further 32 percent also identifying the region as the second most attractive for M&A overall.
• The vast majority of respondents (90 percent) predict an increase in scrutiny of deals for ESG implications over the next three years; almost half (48 percent) believe the increase will be significant.

The full report is available here.

Study Methodology
In late Q4 2021 and early Q1 2022, Mergermarket surveyed 50 senior executives from corporate development teams, private equity firms and investment banks. Forty percent of respondents were based in North America, 30 percent in EMEA and 30 percent in Asia Pacific. The survey included a combination of qualitative and quantitative research. Results were analyzed and collated by Mergermarket. All responses are anonymized and presented in aggregate.

Aon's M&A and Transaction Solutions is a leading M&A advisor and innovator of solutions and services that help secure investments, maximize deal value and drive transaction success by solving wide-ranging issues facing dealmakers throughout the deal lifecycle.
Solutions and services include transactional insurance instruments such as representations and warranties or warranty and indemnity insurance and tax and litigation insurance; specialized due diligence, including people and human capital, insurance, cyber and intellectual property; working capital solutions; and digital, cyber, and intellectual property transaction advisory capabilities.
Working across industries and covering more than 35 countries, Aon's highly experienced teams use proprietary industry data and insights drawn from the more than 4,000 global deals supported annually.

About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Our colleagues provide our clients in over 120 countries with advice and solutions that give them the clarity and confidence to make better decisions to protect and grow their business.