New trends in mergers and acquisitions in the U.S.


The U.S. M&A market hit an all-time high in 2021 with a new record of $2.9 trillion in all deals, accounting for more than 60% of total global deal value by reported value. Russia's invasion of Ukraine has slowed the pace of U.S. mergers and acquisitions. However, the long-term impact of the conflict on the number of mergers and acquisitions in 2022 and beyond is yet to be determined. However, there have been some innovative trends emerging in recent US agreements. These trends are notable for companies and mutual funds interested in trading in the United States.

2022 U.S. M&A Trends:

Private equity investment

Mergers and acquisitions in the U.S. are expected to grow at an annual rate of $1.2 trillion through 2021, largely thanks to private equity investments.

If the trend continues, private equity firms are expected to raise $733 billion, hold a record $1.33 billion in funding, and pursue new investments and add-on acquisitions globally.

Exceptions to COVID-19 and Related Rules

Inclusion of COVID-19 and related exclusions in U.S. transaction agreements is widely accepted because sellers assume that buyers assume the risk of such an event occurring between signing and completing a purchase during the pandemic.

Given the widespread acceptance of this risk sharing between buyers and sellers, this trend is expected to continue and extend into future force majeure events.

Auction jump

Many auctions by U.S. companies produce large numbers of bidders with comparable valuations. As a result, many bidders "skip" the auction, submitting bids before the auction deadline but doing very brief confirmatory due diligence to get themselves ahead of other bidders and win the auction. This trend is likely to continue as long as the U.S. deal market remains active and buyers continue to find ways to stand out from the fierce competition.

Has a "Total Equity Security" commitment statement.

Larger private equity funds often remove the uncertainty of leverage by issuing a letter of commitment to the target company (called a "full equity backing"), in which case the target company can force the funds to pay the full purchase price, But the premise is that the necessary closing conditions are fulfilled. This trend is expected to continue as long as the U.S. M&A market remains competitive and allows larger private equity groups to outperform their smaller peers.

Declaration and Warranty Insurance Policy

Buyers are generally expected to obtain representations and warranties insurance in private M&A transactions in the U.S. to maximize the seller's up-front value and reduce the risk of post-closing claims.

If U.S. deal activity continues to pick up, the trend is expected to continue.

Investing in late stage companies

Like private equity firms, hedge funds and mutual funds are entering a market historically dominated by venture capital funds, with a dramatic increase in demand for late-stage growth capital. This model is expected to increase the number of mergers and acquisitions completed in the U.S. for the foreseeable future, as such funds may require or require investors to conduct turnaround events.