Dealmaking Uptick on Horizon Despite Inflation, Survey Says

By Alexei Alexis, CQ Roll Call

(July 5, 2022) - Global merger and acquisition activity is expected to rise over the coming months despite challenges such as inflation, according to a survey conducted by Datasite, a provider of cloud-based technology services for M&A professionals. The survey of more than 540 global dealmakers found that 68 percent anticipated a rise in merger activity over the next 12 months.

"Despite geopolitical uncertainties and overall market volatility, global deal activity itself is still strong," Datasite CEO Rusty Wiley said in a June 30 statement.

Still, dealmakers aren't ignoring factors such as inflation, according to the survey.

Seventy-eight percent of respondents said they're pricing at least a five to seven percent increase in inflation, if not higher, into their financial valuation models for the rest of the year. Forty-six percent said they expect a greater component of deals to be financed via equity as a result of inflation, with an additional 34 percent predicting more straight cash deals.

Besides inflation, other factors that could complicate dealmaking — without necessarily causing it to decline — include uncertain valuations and the Russia-Ukraine War, according to the findings.

About 36 percent of those surveyed pointed to the war as a factor likely to prevent a deal from closing before the end of 2022, with 15 percent citing inflation and the cost of capital.

Datasite surveyed 543 dealmakers based in the U.S., U.K., Australia, France and Germany in June 2022. Respondents were involved in corporate development, investment banking, private equity and law at the director level and above.

Reprinted with permission from CQ Roll Call via Thomson Reuters Westlaw.