Deal Drivers: Americas HY 2022

DealDrivers:AmericasHY2022 Aspotlightonmergersandacquisitionstrendsin2022 Contents Foreword:M&Acontinuestorunhardasmacropicturedims 03 Outlook:Americasheatchart 04 Allsectors 05 Consumer 15 Energy,mining&utilities 20 Financialservices 25 Industrials&chemicals 30 Pharma,medical&biotech 35 Realestate 40 Telecoms,media&technology 45 Aboutthisreport 50 Foreword:M&Acontinuestorunhardasmacropicturedims ThemacroeconomicpictureacrosstheAmericasissomewhatblurryrightnow.USGDPshrankby0.9%inQ2,meaning theeconomyhascontractedfortwoconsecutivequarters,meetingthecommondefinitionforatechnicalrecession,thoughpolicymakershavepushedbackonstatementsofthatsort. Indeed,theWhiteHousehasbeenquicktoassertthatbyanumberofmeasuresthecountryisnotinfactinarecession,withthemovingaverageoftheunemploymentrateinparticularindicatingthatlabormarketsaretight. Insulatedfromcrises However,despitethesewarningsigns,therehasbeenlimitedmaterialweaknessinM&Atodatethisyear.Although dealmakinghasslowed,thisneedstobeputintoperspective.Theslightdecelerationiseffectivelyameanreversionafteranunsustainablybusyperiodthroughthefirstninemonths of2021. Meanwhile,theFederalReservehasbeguntoraiseratesaheadofEuropeandatapacenotseenfordecadesinanefforttocontrolprices.TheUSdollaristhestrongestit’sbeenin20yearsasinvestorsflocktorisk-offassets.ThisishurtingtheexportmarketandslowinggrowthforUSmultinationalswithbroadrevenuebases. Inaddition,theregionhasalsobeenfarlessimpactedthanEuropebytheongoingconflictinUkraine.ItisalsomanagingtheimpactofthepandemicbetterthanChina,whosezero-COVIDapproachhasslowedtheAPACregion. Themacropictureisdifficulttogaugewithcertainty.SomeindustrialindicatorsbegantosignalincomingdemandpressureatthebeginningofQ3andprospectiveacquirersmayneedtoproceedwithmorecaution,testingtheirbasecaseassumptionsanddivingdeeperontheirduediligence.However,ifH12022isanymeasure,theM&AmarketsintheAmericasarelikelytoremaininrudehealth. 3 Outlook:Americasheatchart MidweasternUS SouthernUS NortheasternUS LatinAmerica&Caribbean Heatchartbasedonpotentialcompaniesforsale Telecoms,media&technology(TMT)continuestooutperformallothersectorsandthisisexpectedtobethecaseoverthesecondhalfoftheyear,accordingtoourforward-lookingheatchart,whichillustratesthedistributionof‘companiesforsale’storiesontheMergermarketintelligencetool. Therewere807suchstoriesrelatedtoTMTassetsinthefirstsixmonthsof2022,nearlydoublethenumberinvolvingpharmaceutical,medical&biotech(PMB)companies,representingthesecond-biggestpipelineofpotentialdeals. Regionally,NortheasternandWesternUShaveunmatchedpedigreeinTMT,with185and169TMTdealnewsitemstotheirnames,respectively.SouthernUSisnotfarbehindwith146stories,withthestarsofbothBirminghamandHuntsville,Alabama,intheascent.Thetwocitiesarevyingforthetitleof“SiliconValleyoftheSouth”. BrazilisnoslouchontheTMTfronteither,withthecountryseeing109TMTstories.SãoPauloisalreadyaninnovationpowerhousewhilefast-risingcitieslikeRecife,whichhasthehighestamountoftechnologypercapitaand14,000peopleworkinginitssoftware-focusedtechpark,isdrawingincreasedattentionforitstechprowess. Brazil Canada WesternUS TOTAL TMT Pharma,medical&biotech BusinessservicesFinancialservicesIndustrials&chemicals ConsumerEnergy,mining&utilities Transportation LeisureAgricultureRealestateDefense Cold Warm Hot Construction TOTAL Note:TheIntelligenceHeatChartsarebasedon 109 25 169 75 146 185 98 807 17 7 87 70 95 139 16 431 33 13 56 29 69 77 35 312 37 6 31 27 51 53 76 281 15 14 40 38 70 54 5 236 23 15 47 33 45 44 8 215 45 13 23 8 47 28 8 172 9 2 9 8 11 15 9 63 19 10 5 8 4 9 55 6 8 3 3 2 5 27 4 2 5 3 2 6 1 23 4 10 2 16 4 1 5 1 2 13 321 105 485 299 561 613 267 2,651 ‘companiesforsale’trackedbyMergermarketintherespectiveregionsbetweenDecember01,2021andJune30,2022.Opportunitiesarecapturedaccordingtothedominantgeographyandsectorofthepotentialtargetcompany. 4 Allsectors Summary:Valueremainswellabovehistoricaveragedespitemacrofears ThemacroeconomicclimateacrosstheAmericasishighlyunsettled.TheInternationalMonetaryFund(IMF)hascutitsUSgrowthforecast,mostrecentlyinJulydownto2.3%from2.9%amonthprior. Meanwhile,USinflationrateshit9.1%inJune—thehighestsinceNovember1981—andtherearesignsinsomepartsoftheeconomythatconsumerdemandisbeginningtocool,particularlyforbigticketitemssuchasnewcars.However,areboundinequitymarketsinJulycoupledwithstillhighemploymentsuggestthattheFedwillstaythecoursewithitstighteningcycletogetagriponprices. OneindicatorthatwillbecloselywatchedtodeterminethehealthoftheeconomyoverthecomingmonthsistheISMPurchasingManagersIndex,whichhadbeguntotrenddowntowarninglevelsasofthebeginningofH2. Holdingfast Yetdespitethevolatility,dealmakinghasheldupwellinthefirsthalfof2022.TheM&AmarketregisteredatotalofUS$1.1trnfrom4,771dealsinH12022,down30.7%and18%respectivelyyearonyear.However,thesepercentage EvenwiththeeasingoffofM&Aactivityfromtheendoflastyear,thereisstillaconsiderablemarginfordealmakingtoremaininline,andevenabove,historiclevels.TakingtheUSalone,the10-yeartrailingaverageforannualM&AvalueisUS$1.49trn.Mid