Rising Complexity Levels in M&A are Creating New Challenges According to ALM’s New Pacesetter Report
ALM Intelligence Pacesetter Research finds that innovators among professional services providers are responding to growing investor demand for help with delivering on longer-term deal strategy
New York, NY – June 29, 2022– New analysis from ALM Intelligence Pacesetter Research found that while the number of M&A deals have declined since 2021, deals are becoming increasingly complex and require more long-term support from legal teams. The decline in deal volume is forcing professional services providers to respond to very different client needs as investors become more risk-averse and stakeholders demand greater clarity in deal investment narratives.
In addition to increasing complexity in M&A deals, key trends identified in this research include:
- All indications are that deal activity will remain steady and professional services pipelines full well into 2023 and beyond
- Increases in deal complexity in 2022 are exacerbated by recent geopolitical, economic, and social volatility, even when compared to 2021
- With rising interest rates and other market factors, capital is more expensive, and exit liquidity is reduced, making valuations more difficult to justify
- Investors (both private and even some strategic) are focusing on the longer-term value prospects for potential targets, looking past Day One to ensure they achieve the full value laid out in the deal thesis over the target asset’s full lifecycle
- The shift in investor strategy has accelerated a trend among innovative professional services providers whereby they are pivoting their service focus away from the transactional side of deals – utilizing technology to accelerate and ensure greater accuracy in the most commoditized components of transaction services – while partnering with clients to ensure they realize the full deal value
“There are strong indications that deal activity will continue at a healthy clip well into 2023, if not beyond,” asserted ALM Intelligence Pacesetter Research Director, Tomek Jankowski. “But the most innovative professional services providers in M&A markets recognize that delivering on deal thesis goals is also going to be more difficult.”
As detailed in the report, investors are now thinking about assets differently, looking past the transaction and focusing on ensuring they can realize the full value promised in the deal thesis. The evolving investor focus means their attention is now turning towards managing the financial and operational performance and risk profiles of their acquired assets over the entire lifecycle of the asset and their portfolio. For all this, they are looking for help from professional services providers, which is forcing innovators among providers into new client engagement models.
In ALM Intelligence Pacesetter Research: M&A Services 2022, the Pacesetter Advisory Council assessed dozens of providers to arrive at twenty-four providers identified as Innovators for their ability to deliver client impact in today’s ever-shifting (and very crowded) M&A markets. Additionally, the research and analysis provide insights into the competitive dynamics and service delivery trends driving convergence across insurance, investment banking, legal, management consulting, and multi-service providers.
In this report, ALM Intelligence Pacesetter Research evaluates the cybersecurity capabilities and offerings of the following providers: Allens, Alvarez & Marsal, Ankura, Bain & Company, BDO, BearingPoint, Boston Consulting Group, Copper Run, Crowe, Deloitte, EY, Fusion, Goodwin Procter, Herbert Smith Freehills, Kearney, KPMG, L.E.K., McKinsey & Company, Mercer, OC&C, PwC, Ropes & Gray, The Ince Group, and Willis Towers Watson.
ALM Intelligence Pacesetter Research provides independent, objective research to providers and buyers of professional services, coupled with practical insights that inform the decision-making process for strategic planning and procurement professionals.
To learn more about the M&A research or obtain the full version of the report, go to: https://www.alm.com/intelligence/pacesetter-research-2/maservices/.
For more information or to obtain the full version of the ALM Intelligence Pacesetter Research series, visit: https://www.alm.com/intelligence/pacesetter-research/.
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