No Match Found
The record levels of deal activity we saw in 2021 are likely to continue this year as companies explore M&A, divestitures, special purpose acquisition companies (SPACs) and other transactions. In PwC’s January Pulse Survey, 88% of executives across the C-suite said pursuing corporate M&A, joint ventures and alliances is important for their company’s growth in 2022. Nearly half said it was very important.
However, if these corporate or private equity deals are to be successful, they need to go beyond traditional metrics such as topline growth, cost leverage and integration synergy. That was the focus of our recent Deals 2022 Outlook webcast, which covered three key areas that are increasingly important in deals: value creation; environmental, social and governance (ESG) goals; and digital transformation.
Value isn’t defined by the price of a transaction. Instead, it hinges on what a business can achieve with a value creation strategy that optimizes revenue growth opportunities, increases resilience and enhances the workforce. Dealmakers should consider these critical areas.
ESG is important enough to be part of a company’s overall business strategy and should fit in comfortably within its strategic plan. In the Pulse Survey, 88% of respondents said ESG is very important or somewhat important to their company’s ability to grow this year. The same percent said they’re investing in ESG initiatives in 2022.
It’s clear private equity firms and corporates are taking ESG very seriously. In fact, a growing number of companies are responding to stakeholder pressure and have begun looking at deals through an ESG lens. That makes it critical to take the following actions:
The pandemic has accelerated digital transformation, and companies across sectors are trying to differentiate themselves through their use of emerging technologies. Technology is a factor in a growing number of deals in every sector, and the share of tech acquisitions by non-tech buyers continues to rise.
In the Pulse Survey, 60% of executives said capitalizing on digital transformation initiatives is very important to their company’s ability to grow in 2022, while 59% said their company will invest significantly in digital transformation initiatives. Some examples of sectors that are making tech acquisitions:
Businesses should approach deal and investment opportunities in 2022 with the following points in mind.