The M&A landscape has shifted this year to take account of more strategic concerns following record levels of dealmaking in 2021. Airi Hammalov explained that conditions in M&A are returning to normal following a particularly active period and companies are now focused on tackling macro headwinds such as supply chain disruption, inflation and geopolitical unrest, creating interesting opportunities for buyers.
“There are opportunities for investors to generate really healthy returns as valuations come down and investors can certainly make really bold moves in this market,” Hammalov, a partner at Baker McKenzie, told the Deal.
Also discussed how volatility can affect the pricing of deals with the uncertain cost of credit causing caution. Hammalov spoke about protections against volatility such as reps and warranties insurance, tax liability insurance, intellectual property insurance, more robust due diligence and increasing use of earn-outs.
The rise of ESG has also become a serious consideration in the world of dealmaking. The attractiveness of companies is becoming increasingly interconnected with their record on sustainability and its something M&A practitioners have to factor in when giving advice.
“In general there’s an overall trend of higher transparency with ESG information,” said Hammalov. “And this is especially telling in cross-border deals where different jurisdictions have different standards.”
The attorney also talked about the effects of Covid-19 and other factors on supply chains and how dealmaking has been influenced by the need for reconfiguration and improvements in efficiency. Technology has also become more critical since the start of the pandemic due to populations relying more on digital solutions. This is a trend that has not escaped the attention of M&A practitioners.
The evolving roles of remote due diligence, foreign direct investment, antitrust and general regulation were also discussed in the context of cross-border deals.
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Editor’s Note: This podcast was sponsored by Baker McKenzie.