On August 22, 2022, Becca Chappell was quoted in International Financial Law Review on changing conditions in the global M&A market. According to the article, with the international community having largely adapted to the sanctions climate, investors and their advisers now cite inflation, rising interest rates, and overall economic uncertainty as the key disruptors, with some predicting an increase in distressed M&A transactions in the coming period.
“Given how hot the market was in 2021, with SPACs playing a big part in that, there was going to be a natural slowdown just off of 2021,” said Chappell. “But that got accelerated by the whole geopolitical context and tax policy issues that the US was tackling in late 2021 and early 2022, which made it a very abrupt change.” The war in Ukraine, stock market uncertainty, leftover ripples from the pandemic, and pending tax legislation in the United States and elsewhere have all been contributing factors, she added.
Although overall M&A activity levels have dropped by 21% globally in the first half of the year compared to the same period last year, advisers argued that deals are still being closed – only of a different kind. “People are now really focused on strategic, targeted acquisitions – on businesses that are successful, are weathering the market volatility, and are looking for growth opportunities,” said Chappell. What has also changed is the type of funding for transactions, Chappell explained. “Rather than being debt and capital markets-focused, we're seeing more funding come from the private equity side, as opposed to banks,” she said. “This is probably going to carry on throughout the year.”