Tomorrow’s deal dynamics: How the pivot to a multinodal world is reshaping the M&A market

The clash of two opposing forces is remaking the landscape for mergers, acquisitions and other deals. A world that grew more connected through technology and culture is becoming more fractured by economics and geopolitics. Over the last few years, these forces of fragmentation have brought profound changes to the global business environment. Yet extensive supply chains, increased communication, prolific social media and other factors make it unlikely that developed countries can become totally self-sufficient and isolated. The spread of the COVID-19 pandemic only confirms this — a desire to secure borders, both physically and psychologically, versus the reality that unwinding global ties is difficult.

It’s a far cry from the world in which deal activity has grown over the last three decades. The end of the Cold War in 1991 set into motion a golden period of globalization. Multilateral institutions such as the European Union and World Trade Organization formed. Democracies emerged in Latin America. China rose as the workshop for the world. As a result, supply chains spread, and trade and mergers and acquisitions (M&A) flourished.


But globalization’s impact was uneven, spurring policy responses in some nations. In a more multinodal world — where globalization is giving way to more individual connections — corporate and private investors have to navigate a new era of geopolitical competition that influences how they pursue growth. And failing to adapt isn’t an option. Even in decline, globalization has become a requirement for too many companies in a range of industries, and they ignore the international environment at their own peril.

All deals are cross-border deals

Cross-border deals typically account for about one-fourth of transactions involving US companies, and outbound deals by US companies are only about 15% of total volume, according to Refinitiv. The percentage of deals for non-US targets increased significantly in 2021 and 2022 year to date through May 15.

The fragmentation of the global order also has an impact beyond cross-border deals, as US companies in different industries increasingly have a value chain that isn’t entirely domestic. From operations to suppliers to customers, many businesses have a non-US element that could be vulnerable to disruption, which could affect a company’s value in a deal.

Consider the different things that actually cross borders: goods via trade, capital via M&A deals and other investment and people via immigration. The forces of fragmentation ultimately affect each of these. Each also is a key consideration in doing a deal, whether the transaction explicitly involves companies in different countries or is a domestic deal with international elements. 

Tomorrows deal dynamics multinodal world returns

The forces of fragmentation …

US companies should understand and adapt their growth strategies for the forces of fragmentation, which have combined to make the balance of geopolitical power and its influence on business investment more fluid than it has been since World War II.

Rise of populism

Thirty years of globalization has led to unprecedented growth, but also to inequalities. In its 2019 study of regional inequality in 20 advanced economies, the International Monetary Fund found that “regional disparities in income are large, persistent, and increasing over time.” Concerns over inequality have run in tandem with a decline in trust of traditional institutions, including the media and the judiciary. A primary outcome has been the rise of populism or “muscular nationalism,” in which an “us-versus-them” mentality is more dominant. As a result, national priorities — cultural and financial along with political — have turned inward.

Domestic investment

Both the Trump and Biden administrations have pushed for more domestic investment. The US has seen significant shifts in trade agreements, immigration policy and regulations for foreign investment.

China's influence

As countries have turned inward, the geopolitical landscape also has changed significantly. Russia’s 2022 invasion of Ukraine triggered the largest armed conflict in Europe in 75 years, significantly impacting everything from international defense strategies to the price of commodities. China also is an important pressure point, as its economic rise shifted the dynamic with Western nations. After serving mostly as a production partner, China is now a direct competitor to the US in strategically important industries, such as aerospace and telecommunications. Sweeping efforts such as the Belt and Road Initiative could pull other nations – especially developing countries hungry for investment – closer into China’s orbit.

Global hierarchy shifts

For all the business opportunities with data and emerging technologies such as artificial intelligence and the Internet of Things, the risks to cybersecurity and privacy have mushroomed. Hackers and other bad actors not only have caused breaches at many US companies but are active in spreading misinformation that can manipulate sentiment among large groups of people and potentially put a competitor country at a disadvantage. 

… and how those forces could evolve

These larger trends are playing out in specific ways around the world.

Government instability and intractability

Many countries are seeing significant shifts in their domestic political landscapes, making governing more difficult. In more mature Western democracies, political parties are fracturing, and trust in some core domestic institutions is declining.


Trade wars

Trade is a tool in government attempts to translate a protectionist philosophy into a stronger domestic business environment. Even with the approval of the US-Mexico-Canada Agreement (USMCA) in 2020, trade disputes and tariffs between the US and multiple nations — from China to France to Brazil — have strained political relationships and forced business adjustments, such as shifting production to other countries.

M&A trends going forward

Even with globalization under strain, cross-border deals are still an option for many US companies. Some businesses may have difficulty achieving scale or reaching new customers domestically. Talent at a firm in another country could boost an acquirer’s workforce. Also, innovation often isn’t bound by borders. For these reasons and others, potential buyers and sellers should take the following actions when considering capital investments across country lines:

  • Reassess political risk on your entire portfolio, as well as your current deal funnel, in light of geopolitical changes and ongoing COVID-19-related influences. Key elements include changes in the regulatory environment and stability of domestic institutions.
  • Consider dispersion, not concentration. In evaluating target companies, assess supply chain resilience in light of increased needs for agility, even at the risk of cost effectiveness.
  • Explore regional plays. For target companies, moving supply chains regionally may allow for both labor cost arbitrage and favorable regulations — such as the USMCA —  and the effectiveness of physical proximity of production and consumption.
  • Make regulatory knowledge a core competency. As trade, immigration and other regulations get more complicated — and shift at faster intervals — deal teams should confirm the regulatory environment is part of developing their deals strategy.



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Colin Wittmer

Colin Wittmer

Incoming PwC US Chief Financial Officer, PwC US

John D. Potter

John D. Potter

Deals Clients & Markets Leader, PwC US

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