Global M&A Insights - innovation thrives amid challenging conditions

Inflation continues to be uncomfortably high in many advanced economies, with interest rates expected to increase further. On the flip side, deal activity was up in Q2 compared to the previous quarter, the S&P 500 has risen sharply over the past six months, and high-yield bonds are generating healthy returns.

Research shows that confident deal-making in turbulent times can deliver outsize returns, and our observation on the current market is that innovative structuring is helping businesses gain a competitive advantage.

This is the focus of our latest edition of M&A Insights: where are we seeing activity, and what lessons can be drawn from the way those deals are being done?

Middle Eastern sovereign wealth funds reshape global M&A terms

Our first article looks at the increasing power of Middle Eastern sovereign wealth funds. Higher oil prices following Russia’s invasion of Ukraine have boosted revenues among the region’s biggest SWFs by more than USD1 trillion over the past year.

They are now among the most active and sophisticated investors in the world and are pursuing a broader range of M&A opportunities, including full buyouts and co-investments alongside strategic acquirers.

Many are also exploring growth investments in the tech sector, where their presence in a cap table can prove invaluable for founders looking to attract additional investment.

However, the advent of a landmark piece of EU regulation is set to impact their future deal-making on the Continent, as our team explains.

DOJ and FTC propose sweeping changes to U.S. antitrust notification regime

Across the Atlantic, the Department of Justice and Federal Trade Commission have recently unveiled sweeping changes to the U.S. merger control filing process that will significantly increase the information burden on merging parties.

Among other things, the new form will require details on the rationale for the transaction as well as granular financial data, new categories of internal documents and, importantly, the “structure of entities involved, such as private equity investments”. The new form, coupled with the imminent publication of updated U.S. merger review guidelines, will revolutionise how the U.S. agencies review transactions in the future.

Complex cross-border challenges change nature of technology transactions

Our next piece examines the state of tech deal-making, and particularly how the complexity of challenges such as climate change is changing the nature of tech transactions.

Today we are seeing more cross-sector, cross-border collaborations as businesses bid to develop new low-carbon energy sources with applications in everything from grid-scale electricity generation to powering container ships.

Collaboration deals enable businesses to develop proofs-of-concept while minimising financial risk – but to get them right there are a number of strategic, legal and cultural questions that need to be considered from the outset.

Public-to-private deals present a target for arbitrage funds

Next, we explore the IMF’s latest economic forecasts, and how sluggish growth in advanced nations opens a window of opportunity for arbitrage funds.

As investment banks report take-private deals starting to kick off in one particular EU member state, we explain how the quirks of its regulatory regime make it a prime target for arbitrage investors, who need only one share to intervene in deal processes to bump up stockholder compensation.

Groundbreaking U.S. energy policy generates wave of innovative M&A

Our last piece looks at the impact of the Inflation Reduction Act and Infrastructure Development and Jobs Act on U.S. infrastructure M&A.

We reveal how the Biden Administration’s signature green policies have seen USD150 billion of investment in domestic utility-scale clean energy projects announced since August 2022 – more than in the previous five years combined.

This unprecedented increase is sparking some interesting M&A activity as funds look to enter the market much earlier in the development cycle.