M&A Highlights: 3Q22

Insights insights@iongroup.com Monday,October3,2022 WrittenbytheInsightsteam M&AHighlights9M2022:Shell-shocked PoweredbyDealogicdata,M&AHighlightsreviewsM&AactivityacrossNorthAmerica,EMEAandAPACin2022todate.Alldatacorrectasat30thofSeptember2022 Howlowcanitgo?GlobalM&Aplungesagainin3Q22 Mergersandacquisitionstookasharperdownturninthethirdquarterastheworldcontinuedtograpplewithsoaringinflationandhopesofasoftlandingevaporated. If2022’sfourthquarterisanythinglikeitsthird,then2022maystruggletobeatpandemic-ravaged2020’stallyofUSD3.6tn.Forthefirstninemonthsof2022,globaltransactionsreachedUSD2.97tn–aboutathirddownfromthesameperiodduring2021’srecordyearandroughlylevelwiththecomparableperiodinpre-pandemic2019. Globaldealmakingin3Q22droppedtoUSD722bn–a54%declinefromayearearlierand38%downsequentiallyfrom2Q22.The6,916transactionsin3Q22werealso32%loweryear-on-yearand26%downsequentially.Itmakes3Q22theworstquartersince2Q20,whenthestartofthepandemichalteddealmaking. The3Q22slowdownaffectedallregions.NorthAmericafaredworst,withM&Aplungingby63%year-on-yeartoUSD273bnassummertimehopesofastockmarketreboundebbedwhentheFederalReservedoubleddownonmonetarytighteningtotampstubborninflation. Europe’sfellby41%toUSD207bnoverthesameperiodasanenergycrisisroiledthecontinent.Asia-Pacificfellby51%toUSD192bnas China’szero-Covidpolicygummedupsupplychainsandarealestatecrisisthreateneditseconomy. USDbn 7000 6000 5000 4000 3000 2000 1000 0 Hittingthebrakes:GlobalM&A 50,000 40,000 30,000 20,000 10,000 0 2010201120122013201420152016201720182019202020212022 Q1 Q2 Q3 Q4 DealCount Source:Dealogic Gonesour Inasignofjusthowmuchactivityhassoured,eightoftheyear’stop10dealstookplacebetweenJanuaryandMay.OnlyconsumerhealthcarecompanyHaleon’sUSD30.9bnspinofftoshareholdersinJulyandFigma’sUSD20bnsaletoAdobe[NASDAQ:ADBE]inSeptembertookplaceafterwards. Twotop10dealsarealreadyunravelling:ElonMuskwillbattleTwitter[NYSE:TWTR]incourtthismonthashefightstounwindaUSD44bndealtobuythesocialmediacompany.KKRalsopulleditsUSD20.5bnall-cashbidforAustralia’sRamsayHealthCareinSeptember,fivemonthsafterfirstagreeingit.During1Q-3Q22,185dealsworthUSD239.3bnwerecancelledcomparedwith428transactionstotalingUSD475bnabandonedin1Q-3Q21.Inthecurrentvolatileenvironment,moredealscouldcollapse. GlobalM&Avaluebyregion-3Q22 2% 2%2%1% 4% 38% 29% NorthAmerica GlobalM&Avaluebysector-3Q22 TechnologyUtility&EnergyHealthcare 20% TelecommunicationsOil&GasConsumerProducts 11%RealEstate/PropertyFinance 9%Auto/Truck 6%8%TransportationConstruction/Building Others 4% EuropeNorthAsia 19% 5% IndiaSubc 2% Australasia 4% 13% LatinAmerica 4% MiddleEast 5% SEAsia 6% Japan 6% Others Source:Dealogic GlobalIntelligenceHeatChart:ThebiggestM&Aopportunitiesareinthetechandindustrialssectors EMEAAPACNorthAmericaLatinAmerica TMT 823 642 688 170 496 796 205 11 266 378 525 36 431 346 187 37 262 380 287 36 261 300 270 58 197 370 160 56 67 279 7 5 125 138 28 16 87 170 6 6 IndustrialsandChemicalsPharma,Medical&BiotechConsumer FinancialServicesBusinessServicesEnergy/Mining/UtilitiesRealEstate LeisureConstruction Note:TheintelligenceHeatChartarebasedon“companiesforsale”trackedbyMergermarketintherespectiveregioninthelastsixmonths.Opportunitiesarecapturedaccordingtothedominantgeographyandsectorofthepotentialtargetcompany. Source:Mergermarket FinancialSponsors:Uncertaintybringsopportunity Tighteningfinancialconditions,soaringinflationandrisingenergypriceshaltedthelivelypaceofprivate-equitydealmakingseeninthefirsthalfoftheyear.YetPEfirmsremainwellcapitalizedandreadytoseizequalityassetsanddecentfinancingopportunitieswhenavailable. Globalfinancialsponsorssigned1,744dealsworthUSD550.4bninthefirstninemonthsoftheyear,nearly29%downinvaluefrom9M21.Activitymarkedlysloweddownoverthesummerwithonly489buyoutsworthUSD104.8bnagreedinthethirdquarter,downfrom648and607inthefirstandsecondquartersrespectively.Sponsoractivityaccountedfor7.1%ofoverallM&Adealvolumein3Q22,thelargestquarterlysharesince2007. USDbn 300 Globalbuyouts:Sponsorscut3Q22buyoutspendby60%yearonyear 250 200 150 100 50 0 700 600 500 400 300 200 100 0 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3 2015201620172018 DealValue 2019 DealCount 2020 2021 2022 Source:Dealogic Top10LikelyToIssueSponsorExits AccordingtoDealogic’sproprietaryLikelytoIssue(LTI)algorithm,Vaco,aUS-basedconsultingandplacementfirm,LogicMonitor,aUS-basedmonitoringsoftwareprovider,andNeopharmedGentili,anItalianpharmaceuticalcompany,aresponsor-backedassetswiththehighestlikelihoodofapotentialexitinthenext12months. PortfolioCompany FinancialSponsor YearsHeld LTIScore*(Current) VacoLLC OlympusPartnersLLP 4.8 87.2 LogicMonitorInc VistaEquityPartnersLLC 4.3 81.9 NeopharmedGentiliSpA ArdianSA 3.8 81.2 TransportationInsightLLC GryphonInvestorsInc 4 81.1 PlaskoliteLLC PritzkerGroup 3.8 80.9 MillenniumTrustCoLLC AbryPartnersInc 3.7 79.9 BristolHospiceLLC WebsterCapital 4.8 79.1 ZabkaPolskaSA CVCCapitalPartners 5.4 78.9 ConsolisHoldingSAS BainCapital 5.4 78.9 VulcainIngenierieSARL EquistonePartner