PwC predicts future of M&A trends

DNHN - According to PwC's Global M&A Trends Report: Mid-2022 Update, M&A may be a strategy to seek value-delivering opportunities in a tough environment.

According to PwC, M&A activity among traders set a new peak in 2021, with more than 60,000 deals totalling more than $5 trillion. Despite the presence of several economic impediments, such as fast-rising inflation and bank interest rates, dropping stocks, and the energy crisis caused by the Russia-Ukraine conflict, M&A activity continued to thrive in the first half of 2022.

However, to adapt to an unpredictable economic climate, the way to perform these transactions will need to alter.

According to Mr Tiong Hooi Ong, Deputy General Director and Head of Transaction Advisory Services at PwC Vietnam, despite macroeconomic challenges, 2022 will be an attractive year for M&A transactions in Vietnam. Foreign investment funds continue to pay close attention to mergers and acquisitions.

"As traders divest to focus their efforts on expanding company skills and reshaping business sectors, we've observed a rise in strategic moves to optimize portfolios." "By acquiring core businesses through M&A," Mr Tiong Hooi Ong explained.

PwC stated that Vietnam's economic recovery is still robust, with GDP growth anticipated at 6.5 per cent in 2022, far better than the region's growth prediction. Asia-Pacific accounts for 4.4 per cent. Furthermore, with rules and investor-friendly policies in place, the second half of 2022 provides a chance for traders to re-evaluate their tactics and activities.

Current macroeconomic causes and trends have varying effects on business performance across industries:

Technology, media, and telecommunications: Digital adoption and new technologies remain top priorities, allowing ICT to dominate in terms of M&A investments, accounting for more than a quarter of trade volume and a third of transaction value in the first half of 2022.

PwC anticipates that technology demand will drive M&A activity in software engineering and infrastructure-enabled technologies (5G, data centres, metaverse and related technologies). in the latter part of 2022

Financial Services: The demand for digital skills in this business group, along with continuous pressure from regulators and competition from technology and fintech platforms, suggests that M&A activity will continue to be a driving factor in the transition. This also explains why DVTC is only second to ICT in terms of the number of M&A transactions, accounting for about a quarter of the deal value in the first half of 2022. The sustained emphasis on technology, the need for long-term investment, and lower valuations will drive M&A activity in the second half of the year.

Consumer market: M&A activity in the consumer industry will be directly linked to indicators of economic volatility influencing consumer confidence and expenditure during the coming six months. As organizations strive to restructure business models and reposition themselves for future development, changing consumer behaviour will continue to generate chances for M&A transactions.

Industrial and automotive manufacturing: The emphasis on technology and the digitalization of business models, as well as investment in supply chains and manpower, will generate prospects for M&A in these industries.

Accelerating energy transformation and a focus on supply chain security will drive M&A deals in major mineral industries and national energy supply in the second half of the year.

Healthcare: Investors are showing an interest in biotechnology and new revolutionary technologies such as mRNA vaccines, gene therapy, and telemedicine. Large pharmaceutical businesses would most likely conduct multiple smaller transactions to avoid the difficult regulatory and control issues that larger transactions might entail.

Traders are making adjustments to the new trading environment. Short-term financial market swings, inflationary pressures, fast-rising interest rates, supply chain disruptions, and geopolitical conflicts are all likely to become long-term tendencies.

"This is the moment for real leaders and skilled traders to take big measures and set the scene for the next five years, attaining the most significant goals to the business or reputation," Mr Tiong Hooi Ong stated.

PV