A new Grant Thornton LLP survey of merger and acquisition (M&A) professionals finds that dealmakers are optimistic the rise of M&A deals will continue despite challenges posed by regulation and the ongoing pandemic. Most notably, 68% say they expect deal volume to continue to rise over the next six months, furthering the record-breaking year for M&A activity.
The survey, which polled 156 dealmakers from companies with revenues from $250 million to more than $5 billion, also found that M&A professionals are looking beyond borders: Almost two-thirds (65%) of respondents expect an uptick in cross-border deal activity.
When asked in which industries they expect the most deal activity, respondents most frequently pointed to technology (53%), healthcare and life sciences (43%) and services (33%). Elliot Findlay, Grant Thornton’s national managing principal of Mergers and Acquisitions, says he is seeing a lot of companies outside the technology industry acquiring technology companies.
“The pandemic accelerated the transition from brick and mortar to digital for a wide range of businesses, so many companies are trying to catch up on digital transformation,” says Findlay. “Plus, with interest rates still low, buyers are more willing to pay for strong assets. We’ll just have to see where the ceiling for dealmaking is, but the height of that ceiling may depend on whether valuations continue to rise.”
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According to the survey, just over half of dealmakers polled (53%) believe valuations will increase. Still, Eric Burgess, a partner in Grant Thornton’s Strategy and Transactions practice, notes that valuations are already at unprecedented levels.
“Companies are more eager to diversify their revenue streams than perhaps ever before,” Burgess says, “but it remains to be seen if valuations can get much higher. We’ve already reached a record level of dealmaking, and an increase in valuations will put us even deeper into brand new territory.”
Source: Yahoo Finance