The M&A industry kicked off 2022 with a bang: Microsoft announced its $69 billion acquisition of Activision, making it the biggest gaming industry deal and largest all-cash purchase on record. Sony followed suit with a similar strategic and tactical $3.6 billion acquisition of Bungie, the developer behind Destiny and Halo’s multiplayer shooter games.
Frontier announced its $2.9 billion acquisition of Spirit Airlines, making it the fifth-largest US airline after United, American, Delta, and Southwest. Meanwhile, the life sciences industry remains hot with Merck’s $11.5 billion purchase of Acceleron and Pfizer’s $6.7 billion acquisition of Arena Pharmaceuticals.
With such deals and many more making headlines, it is painting the kind of picture M&A is shaping up to be in 2022.
Unlocking Value as M&A Deal Volume Shows No Signs of a Slowdown
According to a recent KPMG survey of more than 350 US business leaders, M&A is poised to climb even higher than last year. The surge has ushered in a wave of business transformation as companies pursue transactions grounded in sustainable growth.
Corporate strategy leaders are doubling down on investments to create sustainable businesses using M&As to add scale, capabilities, and gain access to new markets. But part of the success in creating sustainable businesses is ensuring M&A deals deliver meaningful value for internal stakeholders and customers and not just opportunistic grabs with cash-on-hand.
It’s not a given that all deals succeed. According to a recent PWC survey of 600 global corporate executives, only a third of deal executives say that value creation planning was a key focus on Day One for their last deal. In contrast, two-thirds agree that value creation should have been a priority on Day One in their latest deal.
Companies are unlocking value by optimizing portfolios, committing capital to investments that drive transformation, while understanding how purpose, culture, and the digital acumen of a company can affect how well it thrives post-deal. They also have to navigate policy uncertainty as the Federal Trade Commission becomes more rigorous in M&A reviews.
Surge in Deals Leads to Capacity and Capability Gaps
As deal momentum continues to surge in 2022, companies are struggling to attract top talent to their teams to execute the volume of active M&A deals.
In a recent Grant Thorton survey, which polled 156 dealmakers from companies with revenues from $250 million to $5 billion+, 50% of survey respondents say they expect to either “increase” or “significantly increase” the size of their teams to respond to the record number of deals.
Eric Burgess, a partner in Grant Thorton’s Strategy and Transactions practice, notes that “I don’t know a private equity firm or corporate buyer that isn’t looking to add people. Many private equity firms are trying to add M&A teams to each portfolio company, which the industry didn’t see a few years ago.”
The On-Demand Workforce is Powering M&A Transactions
One way fast-growing M&A teams are addressing the talent gap is by adding independent experts on-demand. In doing so, they’re attaining greater flexibility while maintaining a consistent bench of reliable subject matter experts to respond to capacity and capability gaps.
Spend on hiring independent M&A expertise on Graphite, for example, rose by 2,019% YoY in 2021. Finance, in particular, became the number one in-demand skill last year as the hiring of due diligence professionals surged. And spend on hiring these experts increased 394% YoY as a result, with companies needing help conducting due diligence, including evaluating risks/opportunities, building financial models, and preparing data rooms.
Propelled by the impact of the pandemic and the groundwork laid in 2021, corporate strategy, M&A, and finance leaders are prioritizing building agility and resilience within their teams to respond to a constantly changing business environment — and the move to this approach is paying dividends.
Companies that lean into the on-demand hiring model lead with a strong advantage. According to McKinsey, companies that can quickly allocate talent to evolving priorities are twice as likely to report strong performance and also deliver better results per dollar spent.
Interested in digging deeper into these trends and more? Download our 2022 State of Independent Workforce report for more insights.