M&A in Europe continued its record setting pace in Q3 2021 and shows no sign of slowing down in Q4, with Europe and North America witnessing economic resurgence.
In Europe, dealmakers are rushing to take advantage of a market created by strong capital markets, rapid vaccine deployment, and rising consumer spending.
he Technology sector, particularly around the convergence of healthcare and technology driven by a desire to contain costs, innovate, and expand services. Deal making across multiple sectors is being driven by continued digitisation, the evolution of consumer preferences and supply chains, and the need to achieve scale or integrate vertically amid fierce competition. Information technology (IT) continues to see runaway activity despite growing antitrust scrutiny.
The Business Services sector continued to see lots of M&A activity as firms pursue expansion: Tax, accounting, and law firms are experiencing an M&A frenzy for technology, talent, and strategic acquisitions. In financial services, Talenom (HEL: TNOM), a Finnish accounting services company, acquired Barcelona-based financial services firm AvaLanding for $2.26 million to expand into the Spanish market as part of its growth strategy. Financial and legal firms in the UK have been especially active in Q3 to increase service coverage within the country.
In September, Welsh law firm Redkite Solicitors acquired David & Snape, another Welsh solicitor’s firm, to strengthen its footprint, and law firm Ridley & Hall acquired Newman & Bond, a residential and commercial property advisor, to expand its law services across Yorkshire. Additionally, new waves of industry specialization within business services for expertise in areas such as technology could drive additional capital to further expand products and services in the relatively low-risk and recession-proof field.
The Energy and Materials & Resources companies are pursuing production growth cautiously, even as commodity prices soar, and are instead turning to M&A to achieve environmental, social, and governance (ESG) transformation.
Europe’s natural gas crisis sends ripple effects worldwide, and in the medium term, could augment the already intense pressure in Europe to transition fully to renewables, spurring more M&A for clean energy producers.
The Outlook for Q1 2022 may be more cautious with worries around higher long-term inflation, the accelerating Delta variant over winter, and the prospect of tightening fiscal-monetary policy dampen expectations, however at this time, this may only represent a slight cooling of the M&A market, reverting to norms versus a correction.
