Deal activity is showing no signs of abating. “I don’t see many areas that aren’t bright spots,” PJ Solomon CEO Marc Cooper says in an interview with Mergers & Acquisitions. “I can’t remember a point in my 30-year career” when activity has been this robust, he notes. Technology, healthcare, and financial services have led league tables, with strong showings from industrials and media as well.
It remains unclear whether the few market laggards will see a recovery in deal activity. “Leisure is challenged because of Covid; retail has been an issue,” Cooper says, except for consumer companies with direct-to-consumer sales channels which have had solid M&A performance recently.
Going forward, even oil and gas might represent a sector where deal interest could see at least a slight uptick. There, Cooper predicts industry players will increasingly ask: “How do we create synergies to have size to withstand commodity price fluctuations?” Energy could be a logical candidate for consolidation on the opposite end of the dealmaking pendulum driving M&A elsewhere—rather than chasing additional revenue, buyers might be interested in scale to reduce costs in a low growth environment.
One catalyst of recent deal activity might not play as large a role in the M&A frenzy as its chalked up to be however, Cooper cautions. Companies deciding on the margin whether to sell might factor in a potential change to capital gains taxation in their decision, but Cooper sees this as a small tailwind given other factors driving activity.
Otherwise, the pipeline for dealmaking remains strong nevertheless.