M&A: Geopolitical uncertainty tops list of dealmakers’ fears

More than half of M&A dealmakers fear the impact of geopolitical uncertainty, with activity in Europe more likely to be significantly impacted than other markets. This is according to the latest Aon/Mergermarket Global M&A Risk in Review report, published today.

Market dislocation or disruption, macroeconomic uncertainty, regulatory risk and digital risk are also causes for concern for dealmakers, as pandemic-related worries fade. Some 90 per cent of respondents predict an increase in scrutiny of deals for ESG implications over the next three years, with almost half anticipating the increase will be significant.

Despite these fears, the report suggests that last year’s resurgence of M&A activity can be sustained, albeit perhaps not at the record levels seen in 2021.

Commenting on the findings, Alistair Lester, global co-CEO of M&A and Transaction Solutions at Aon, said: “Even after the recent intense period of record M&A activity, dealmakers are still maintaining a healthy pipeline with cash at unprecedented levels. They are, however, faced with serious headwinds and new forms of volatility including geopolitical uncertainty driving inflation and interest rate increases, the acceleration of the digital economy, a constantly changing tax landscape, sophisticated cyber threats, heightened scrutiny of environmental, social and governance programmes and a challenging talent market that puts pressure on people programmes and integration.”

Gary Blitz, global co-CEO of M&A and Transaction Solutions at Aon, added: “In today’s environment, it is critical for both strategic and private equity dealmakers to take a wide view to mitigate exposures and make better decisions when approaching financial, tax, legal and other risks. Dealmakers are encouraged to identify opportunities throughout the deal lifecycle to secure their assets and enhance their returns as well as examine how transactional insurance solutions can improve transaction structures and take certain contingencies off the table for buyers and sellers.”

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