Key dealmaking sectors for 2022

As the country stumbles into 2022 with an Omicron hangover the market for mergers and acquisitions remains robust as confidence remains stubbornly high despite increasing inflationary pressures.

Continued inflationary pressures, which has seen CPI peak at 5.1 per cent in November 2021, means each business must ensure that it has an appropriate financial structure to weather current market conditions.

The move from the government-supported CBILS and BBILS to the less generous Recovery Loan Scheme and their subsequent withdrawal will create liquidity pressures for many.

The funding landscape has changed substantially and ensuring suitability of supply is as critical as any other key raw material.

The liquidity in both the debt and private equity markets will continue to drive M&A activity and two key sectors which we predict will be attractive to investors will be technology and healthcare.

Technology has become the driver within businesses and continues to flourish.

Developments such as artificial intelligence and the “Internet of Things” has led to high demand for IT experts and innovative technologies.

Technology businesses are seeking to accelerate the integration of new technologies through acquisition rather than in-house investment.

Healthcare services will continue to see significant acquisition activity. High acuity care has always been attractive to investors due to the restriction on supply and the robust, highly predictable fees available.

The impact of Covid on primary care has led to the government committing £36bn to the reform of adult social care and this will lead drive further M&A activity within the sector.

In addition, the continued integration of technology into delivering virtual care and digital systems will provide acquirers with the opportunity to secure synergies from consolidating several businesses onto a single digital operating platform.

We remain optimistic in respect of 2022 with a robust pipeline of both acquisitions and disposals across all sectors including technology, healthcare, manufacturing, and transport. Our experience is that investors remain attracted to robust businesses that can differentiate themselves from the competition.