2023年貝恩全球并購投資報告-英

GlobalM&AReport2023WhenM&Aistheanswer:Inanuncertainmarket,boldmoveswilldefinethefutureAcknowledgmentsThisreportwaspreparedbytheleadershipteamofBain

&

Company’sGlobalM&AandDivestiturespractice,withspecialdirectionfromLes

Baird,partner;DavidHarding,advisorypartner;AndrewGrosshans,partner;KaiGrass,partner;SuzanneKumar,practicevicepresident;MadhurimaBhattacharya,associatepartner;JoergOhmstedt,practicedirector;andaneditorialteamledby

DavidDiamond.TheauthorswishtothankthemanymembersoftheBain

leadershipteamwhocontributedarticlestothisyear’sreport.Additionally,

wewishtothankthefollowingcolleaguesfortheirhelpwiththisreport:Bain

PartnersPeterHorsley,HarshveerSingh,ColleenvonEckartsberg,

SamRovit,DaleSta?ord,AdamHaller,Je?Haxer,andJoost

Spits;PracticeDirectorsDahlnaeYu

andScottNancarrow;PracticeSeniorManagersAmy

Wall

andDustinRohrer;SeniorKnowledgeSpecialistDominikaAdamaszek;PracticeSeniorAnalystAmolMathur;ConsultantsConnieCai,MichelleTucker,andArsalanBukhari;andAssociateConsultantsElizaWright,Ben

Thomas,andVirginiaMiller.Thisworkadditionallybene?tedfromthesupportofBain

CapabilityNetwork’sAbhishekJain,SiddharthSharma,EkaparnaGhosh,DivyamDewan,MohitGupta,andJayantSingh;aswellasBain

ResearchandDataServices’EmilyLane,JohnPeverley,LauraCaringella,BrandonRiney,PiotrSzostakowski,andOlgierdKotylo.Thisworkisbasedonsecondarymarketresearch,analysisof

financialinformationavailableorprovidedtoBain&Companyandarangeofinterviewswithindustryparticipants.Bain&CompanyhasnotindependentlyverifiedanysuchinformationprovidedoravailabletoBainandmakesnorepresentationorwarranty,

express

orimplied,thatsuchinformation

isaccurateorcomplete.

Projected

market

andfinancialinformation,analysesandconclusionscontainedhereinarebasedontheinformationdescribedaboveandonBain&

Company’sjudgment,andshouldnotbeconstruedasdefinitiveforecastsorguaranteesoffutureperformanceorresults.Theinformationandanalysishereindoes

notconstituteadviceofanykind,isnotintendedtobeusedfor

investmentpurposes,andneitherBain&Companynoranyof

itssubsidiariesortheirrespectiveo?icers,directors,shareholders,employeesoragentsacceptanyresponsibilityorliabilitywithrespecttotheuseoforrelianceonanyinformationoranalysiscontained

inthisdocument.Thiswork

iscopyright

Bain&

Company

andmaynotbepublished,transmitted,broadcast,copied,reproducedorreprintedinwholeorinpartwithouttheexplicitwrittenpermissionof

Bain&Company.Copyright?2023Bain&Company,Inc.Allrightsreserved.GlobalM&AReport2023ContentsLetterfromtheM&ATeamStateoftheMarket13LookingBackatM&Ain2022LookingAheadtoM&Ain2023Hot

Topics41218M&AinTimesofTurbulence:LessonsfromtheLastRecessionWhenBuying(vsBuilding)IstheRightMove

for

Engine2Tougher

Times:PuttingtheDiligenceBackinDueDiligence192430HowtoAvoid

theFaultLinesSendingTremors

throughCulturalIntegrationinM&A35434550556065IndustriesM&AinAerospaceandDefense:NewTypes

ofDealsinaDynamicIndustryM&AinAutomotiveandMobility:FindingAlternativeRoutestotheFutureWhatConsumerGoodsCompaniesAreLearningfromAlternativeDealsRetail’s

NewM&ABalancingActM&AinDiversifiedIndustrials:ESGPlaysDriveBreakthroughCapabilitiesM&AinEnergyandNaturalResources:BeatingtheOddsinEnergyTransitionDeals6975M&AinBanking:ThreeTypes

ofDealsfor

2023iGlobalM&AReport2023ContentsM&AinInsurance:ThereAreInsurtechDealstoBeDone,butProceedwithCaution798488M&AinPayments:Four

Ways

ThatM&AWillPropelThisDynamicSectorM&AinWealthandAssetManagement:HowDealsWillShakeUptheIndustryM&AinHealthcareandLife

Sciences:WhytheIndustry’s

Wait-and-SeeDaysWillEnd9399M&AinMediaandEntertainment:To

InteractivityandBeyondM&AinTechnology:

NeverWasteaGoodCrisis102M&AinTelecommunications:HowtheEndofFree

MoneyOpensUpNewOpportunities106112RegionsM&AinBrazil:ANationPreparesfor

ChangesM&AinIndia:HowLongCanThisHotspotBucktheGlobalDownturn?M&AinJapan:PressingPauseonTransformativeM&AM&AintheMiddleEast:HowaRegionGrowswithM&AMethodology113117122125130134Key

ContactsiiGlobalM&AReport2023Letter

from

theM&ATeamDearfriends,Lastyearwasachallengingoneforalldealmakersasin?ation,interestrates,geopoliticaltensions,andincreasedregulatoryoversightplacedunprecedenteddemandontheskillsofdealexecutives.Throughoutitall,though,M&Apersevered—notalwaysinthesamenumbersorwiththesameprocessesasinthepast,butdealsgotdone.Overall

deal

value

fell

during

the

year,withmultiplesdroppingfromrecordhighsin2021andfewerlargedeals.Butthepaceofsmalldealswassurprisinglyresilient.Anddealmakersentimentaswe

enter2023isoptimistic.Historytellsusthatcompanies

making

bold

moves

during

times

of

turbulence

tend

to

win

overthelongterm.Themissionofthis,our?fthannualreport:ImproveM&Abysharingtheinsightsoftheworld’sbestdealmakers.Les

BairdLeaderofBain’sGlobalM&Apractice1State

of

the

MarketLookingBackatM&Ain2022LookingAheadtoM&Ain2023412StateoftheMarketLookingBackatM&Ain2022Even

as

macroeconomic

uncertainty

reset

the

M&A

market,

dealmakers

persisted.ByDavidHarding,KaiGrass,AndrewGrosshans,SuzanneKumar,

andMadhurimaBhattacharyaAt

a

GlanceAfterastrongfirsthalfof2022,themarketslowedinthesecondhalf,

althoughfundamentaldealactivitypersistedDeclinesinmultiplesandamidyearpauseinmegadealswerethekey

contributorstoa36%declineindealvaluein2022fromarecordhighin2021Geopolitics,regulation,andotherexternalfactorsalsocontinuedtoimpactdealactivitypatternsTheyear2022wasataleoftwohalves.AfterablockbusteryearforM&Ain2021,the?rst?ve

monthsof2022re?ectedcontinuedstrongdealmakingactivity.ThebigturningpointoccurredonJune16,2022,whenaninterestratehikebytheUSFederalReserveBank,combinedwithheightenedmacroeconomicuncertainty,putachillonthedealmarket.Megadealsgreaterthan$10billionwentonpausewhilesmallerdealsslowed.Dealmultiplestempered.Themidyearcorrectionresultedina36%

declineinannualM&Adealvalue,to$3.8trillion(see

Figures

1

and

2).Yet

volumesdroppedbyonly12%,suggestingresilienceandcommitmentamongdealmakers.4GlobalM&AReport2023Figure

1:

GlobalM&Adealvaluefellby

36%in2022M&Adeal

market

value

(in

trillions

of

US

dollars)$6T5.94.64.64.14203.94.03.83.83.63.63.63.33.23.02.82.82.72.72.32.11.71.51.32000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022Compound

annual

growth

rate

for

all

M&A(2021–2022),

?36%CorporateM&A,–30%PEportfolioadd-ons,–50%Financialinvestors,–27%Venturecapital/corporateventurecapital,–41%Specialpurposeacquisitioncompanies,–80%Note:Categorizationsbasedondealtechnique,industry,andacquirerbusinessdescriptionSource:DealogicFigure

2:

Theyear2022wasataleoftwohalves2022

M&Adeal

market

value

(in

billions

of

US

dollars)$500B4544423913824003452833002692542462482452312001000JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovember

DecemberCorporateM&APEportfolioadd-onsFinancialinvestorsVenturecapital/corporateventurecapitalSpecialpurposeacquisitioncompaniesNotes:StrategicdealsincludecorporateM&A

andPEportfolioadd-ons;categorizationsbasedondealtechnique,industry,andacquirerbusinessdescriptionSource:Dealogic5GlobalM&AReport2023As

themarketreset,we

observedsomeunanticipatedshiftsindealmakingand,atthesametime,apersistenceoflonger-termtrends.Ontheonehand,thesuddendropinmegadealsanddealmultiplesre?ectedtheimpactofstructuraluncertaintyonM&A.

Yet

M&Aremainedcentraltocorporatestrategiesforgrowthandpro?tabilityasevidencedbytherelativelyconsistentlevelsofdealvolumeandbalancedmixofscaleandscopedeals.Structural

uncertaintyIn?ation,interestrates,capitalavailability,

industrialpolicy,nationalsecurity,geopoliticaltension,supplychainuncertainty—in2022,dealmakersfacednewlevelsofvolatilityeverywheretheylookedaswellasrisksfromvariablesthatpreviouslyweren’tafocusinmanydealmodels.June’s

interestratehikemarkedanewphaseintheeraofcapitalsuperabundance.Inthefaceofrisingin?ation,theFed’s

movetoraiserateshappenedmorequicklythanmanyexpected.Theimplicationswerefeltinternationallyasothercentralbanksfollowedsuit.TheroleoftheUSdollaringlobaltradeampli?edtheimpact.Dealmakersacrosstheglobesuddenlyconfrontedanunfamiliarunknown—namely,thecostandavailabilityofcapital—amidaweakeningeconomicenvironment.Afterdecadesoflowandpredictableinterestrates,however,acquirerstoldustheywereshakenlessbytherisingcostofcapitalandmorebytheuncertaintytheynowfaced.Theinterestratewarningshotimpacted?nancialinvestorsandstrategicbuyersdi?erently.Privateequityinvestors,reliantondebtfor?nancingdeals,weremoreimmediatelyexposedtocapitalconstraintsandcosts,whichparticularlyimpactedlargedeals.Lendersincreasedscrutinyonnewo?ersasbanksabsorbedloancommitmentsthattheycouldnolongersyndicate.Bycomparison,corporatestendtobeshieldedfromthenear-terme?ectsofinterbankinterestratechanges.Moreover,aswe

exploredinourGlobal

M&A

Report

Midyear

2022,corporateshave

moreoptionsto?nanceM&Athanleveragealone—namely,stockandcash.Regardless,thenewlevelofuncertaintyabouttheeconomicoutlookrevealedbytheinterestratehikeledtoasecularresetinM&Avalueandvolumeforallplayersinthesecondhalfof2022.Acquirersfacedavarietyofotherexternalfactorsbesidesinterestrateambiguity.In?ationandtheemergingrecessionaryenvironmentchallengedassumptionsaboutbasebusinesstrajectoriesforstrategicacquirersandtargetsalike.Supplychaindisruptionscontinuedtoimpacttheaccuracyofprojections,andindustrialpolicyreemergedasaswingfactorforsectoreconomics.Westerngovernmentresponsestoclimateandgeopoliticalcrisespresagedshiftsincorporatepro?tpools.InEurope,amidgrowingconcernabouttheRussia-Ukrainewar,

thelikelyneedtosubsidizewinterenergycostsforconsumersforcedapullbackonfundingforothersocialneedssuchashealthcare.IntheUS,theIn?ationReductionActplacedbetsonrenewablesatthecostoffossilfuels,andnationalsecurityconcernspromptedadecouplingofthesemiconductorindustryfromChina.6GlobalM&AReport2023Strategic

dealmaking

during

an

uncertain

yearDespiteahealthystartto2022,thestrategicdealmarketclosedat$2.6

trillion,a32%declinefromtheall-timehighin2021.Strategicdealvolumesdropped9%andcontinuedtoholdsteadyduringthelastfewmonthsof2022,particularlyinsmallertomidsizedeals(see

Figure

3).Divestmentsheldsteadyat33%ofdeals.Dealmultiplesdeclinedashigherdiscountratescausedcompaniestoputapremiumonnear-termcash?owsoverlong-termgrowth.Multiplesfellfromrecordhighsin2021toa10-yearlowmedianmultipleof11.9

timesenterprisevaluetoEBITDA(see

Figure

4).Thedrop-o?wasmostnotableinthehigh-growthindustriesoftechandhealthcareandlifesciences—eachfellbymorethan?veturns(see

Figure

5).It’s

worthnotingthatthisdeclinemirroredchangesinpublicmarketvaluations.Forexample,theS&P500waso?by20%duringthesametimeperiod.M&Apractitionerstellusthattheyrespondtodealmultiplevolatilitywithlowervaluationsandchangestodealstructure,butfewarewaitingonthesidelinesformultiplestostabilize—asevidencedbysustaineddealvolume.Amidyearpauseinmegadeals(valuedatmorethan$10billion)alsohadasigni?cantimpactontotaldealvaluefortheyear.

TheyearbeganwithmorethanafewheadlinedealssuchasMicrosoft’sFigure

3:

2022overallstrategicdealvalueandvolumeby

monthStrategic

deal

value

(in

billions

of

US

dollars)Strategic

deal

volume$400B3,00033530020010002782482482,0002162022051941801771581571,0000January

FebruaryMarchAprilMayJuneJulyAugust

September

October

November

DecemberDealvolumeDealvalueNotes:

Total

foryear=strategicvaluetotal;strategicdealsincludecorporateM&A

andPEportfolioadd-ons;categorizationsbasedondealtechnique,industry,andacquirerbusinessdescriptionSource:Dealogic7GlobalM&AReport2023Figure

4:

StrategicM&Amultiplesfelltonearly12timesfrom2021’s

historichighof15

4timesMedian

enterprise

value

to

EBITDAmultiples2021=15.4x15X1052022=11.9x1999

0001020304050607080910111213141516171819202122Notes:Mediandealmultiplesforannouncedstrategicdealsinwhichvaluationdatawasavailable;strategicdealsincludecorporateM&A

andPEportfolioadd-onsSource:DealogicFigure

5:

Technologyandhealthcareandlifesciencesmultiplesfellby

morethanfive

turnsMedian

enterprise

value

to

EBITDAmultiples

per

industry

(strategic

deals)30X2010028.923.3

23.420.319.715.915.015.913.915.813.211.315.115.314.114.812.412.710.911.412.610.712.09.1

9.311.612.311.911.610.810.09.28.88.68.57.1TechnologyHealthcareandlifesciencesConsumerproductsAdvancedmanufacturingandservicesMediaRetail2022EnergyandnaturalresourcesFinancialservicesTelecommu-nications201920202021Notes:Mediandealmultiplesforannouncedstrategicdealsinwhichvaluationdatawasavailable;strategicdealsincludecorporateM&A

andPEportfolioadd-onsSource:Dealogic8GlobalM&AReport2023$69billionbidforthegamingcompanyActivisionBlizzard,Broadcom’s$61billiono?erforVMware,andthePrologis-DukeRealtylogisticsrealestatedealfor$23billion.AfterablockbusterMay,

thestrategicmegadealmarketdrieduptemporarilyinJune.Therestoftheyearsaw

asteady(ifmoremoderated)paceofmegadeals.Thehealthcareandlifesciencessectorledtheway

forlargedeals,withJohnson&Johnson’snearly$17billiono?erforAbiomed,amedtechcompany;the$27.8

billionAmgen-HorizonTherapeuticsbiotechdeal;and,mostrecently,theNovozymes-Chr.Hansenmergerforaround$12

billion(seethechapter“M&AinHealthcareandLifeSciences:WhytheIndustry’sWait-and-SeeDaysWillEnd”).Overall,largestrategicM&Adealswerenearlyevenlysplitbetweenscaleandscopetheses(see

Figure

6).We

believe,overthelongrun,therelativebalanceofscaleandscopeobservedduringthe?rstthreequartersof2022isconsistentwiththewinningstrategiesofcorporateoutperformers—namely,abalancingofgrowthinrevenueandpro?ts.Anexaminationofthelargestdealsrevealsdivergingsectordynamicsandstrategies.In2022,advancedmanufacturingandservices,energyandnaturalresources,and?nancialservicescompaniesweremostlikelytostrengthentheircorebusinessviascaledeals(see

Figure

7).Foradvancedmanufacturingandservicesand?nancialservices,thiscontinuesafocusone?ciencyandoperationsviascaledeals.Energyandnaturalresourcescompanies,however,showedanewshifttowardscopeM&Aasenergytransitionspromptedlargerenewablesdeals(seethechapter“M&AinEnergyandNaturalResources:BeatingtheOddsinEnergyTransitionDeals”).Technologyandhealthcareandlifesciences’appetiteforscopeandcapabilitydealsremainedconstantascompaniesinbothindustriespursuedtop-linegrowth.The

healthcare

and

life

sciencessector

ledthe

way

for

large

deals.Takingageographiclens,we

continuedtoseeapreferenceforin-regiontargetsassupplychainshocks,China-USdecoupling,andgeopoliticalrisksfocusedacquirerattentionontargetsclosertohome.Europeshiftedtointraregionaldeals,representingmorethanthree-quartersofdealvaluein2022comparedwithabouttwo-thirdsinrecentyears.Meanwhile,ChinaandIndiaremainedlargelydomesticmarkets(morethan90%ofvalue).InIndia,themostnotabletakeawayfortheyearwasnot?owdirectionalitybutrathertheoverallexplosivegrowthinM&A.

BytheendofOctober,totaldealvaluewasnearly140%higherthaninallof2021.TherestofAsiaandtheAmericasheldsteadyintheirbalanceoftargetbygeography.In2022,theregulatoryenvironmentre?ectedthelonger-termtrendofincreasedscrutinyonantitrustandnationalsecuritygrounds.Forexample,regulatorsintheUK,Europe,andtheUSraisedboth

antitrustandnationalsecurityconcernsaboutNvidia’sscrappedpurchaseofUKsemiconductormakerArm.AndintheUS,theBidenadministrationhasadoptedamoreexpansive9GlobalM&AReport2023Figure

6:

Dealscontinuetobesplitevenlybetweenscopeandscale250

largest

strategic

deals

with

deal

value

greater

than

$1

billionPercentage

of

scale

dealsPercentage

of

scope

and

capability

deals201520162017201820192020202159414650505251495154505048495149Q1–Q32022Notes:Ifmorethan250dealshadavaluegreaterthan$1billioninagivenyear,thenonlythetop250dealswereincluded;iffewerthan250deals,onlythosegreaterthan$1billionwereincluded;thetop250announcedstrategicdealsoftheyearfrom2015to2021excludenonstrategicdealssuchasassetorpropertyacquisitions,financialinvestmentdeals,governmentacquisitions,internalreorganizations,orminoritystakeacquisitions;dealsclassifiedbyrationaleusingaproprietaryclassificationframework,asperstatedstrategicrationaleatthetimeofannouncementSource:BainM&A

database2022(N=2,845companies)Figure

7:

Consumerproductsandhealthcareandlifesciencesprimarilysawscopedeals,whilefinancialservicesandadvancedmanufacturingweredrivenby

scaledealsPercentage

of

scale

and

scope

deals

greater

than

$1

billion

split

by

industry100%806040200ConsumerproductsHealthcareandlifesciencesRetailMediaTechnologyScopeTelecommu-nicationsEnergyandnaturalresourcesAdvancedmanufacturingandservicesFinancialservicesScaleNote:Basedonthe197dealsvaluedatgreaterthan$1billionasofSeptember30,2022Source:BainM&A

database2022(N=2,845companies)10GlobalM&AReport2023de?nitionof“anticompetitive”andhasbeenmorelikelytochallengelargeconsolidationdealsincourt.ConsiderthesuccessfulcaseagainstBertelsmann-ownedPenguinRandomHouse’sproposedacquisitionofSimon&Schusteronthegroundsthatauthors,notjustconsumers,wouldbeharmed.Whilemanyscrutinized

deals

are

ultimately

approved,a

longer

pre-close

period

introduces

theriskofdeteriorationinthebasebusinessandemployeemorale.Onthemargin,thisriskmay

havetemperedboardroomappetiteforlargetransformativedealsoverthepastyear.Inthefollowingchapter,“LookingAheadtoM&Ain2023,”

we

explainwhysavvyexecutiveswillkeeptheirfeetontheM&Aacceleratorevenascompetitorsslamonthebrakes.11StateoftheMarketLookingAheadtoM&Ain2023In

an

uncertain

market,

executives

are

making

the

bold

moves

that

will

define

the

future.ByDavidHarding,KaiGrass,AndrewGrosshans,andSuzanneKumarAt

a

GlanceWe’ve

identifiedfive

M&Athemestowatchfor

intheyearahead:Cash-richcompaniesmakingstrategic,boldmovesAcontinuedprevalenceofsmalltomidsizedealsAbalanceofscaleandscopedealsValuationscomingunderfurtherpressureCompaniesreshapingportfoliosthroughseparationsanddivestituresIn2023,savvyexecutiveswillkeeptheirfeetontheirM&Aaccelerators,evenascompetitorsslamonthebrakesinthefaceofturbulence.ExperienceddealmakersarefamiliarwiththecyclicalnatureoftheM&Amarket.Dealvaluesanddealmultiplesdeclineassellersholdbackandacquirersloseconviction.As

uncertaintyimpactsboththebasebusinessofacquirersandtargets,itbecomeshardertomakedecisionsaboutdeals.It’s

nowonderwhymanyexecutiveslosetheirappetitesforthedealprocessduringturbulenttimes.12GlobalM&AReport2023Yet

historytellsusthatwinnersdon’tpauseM&Aduringdownturns,rathertheytakeadvantageofopportunitiestoreshapetheirindustries.Companiesthatmovequicklywhenothershesitatearerewarded.BainresearchonM&AintimesofturbulencevalidateshowM&Awaspartofthewinningresponseinpreviousdowncycles.We

examinedtheacquisitionactivityof2,845companiesfromaroundtheworldduringtheglobal?nancialcrisisandeconomicdownturnof2008–2009.

We

foundthatinthelongrun,companiesthatexecutedatleastonedealperyearduringtheeconomicdownturnearned120

basispointsmoreintotalshareholderreturnsthancompaniesthatwereinactiveinM&A.Moreover,aswe

exploreinthechapter“M&AinTimesofTurbulence:LessonsfromtheLastRecession,”manyindustry-de?ningdealsweremadethroughoutthelastdownturn.Dealpractitionersarepreparedtotakeadvantageofthismoment.We

surveyedaround300M&Aexecutivesgloballyabouttheiroutlookandprioritiesfordealmakingin2023.Respondentsanticipateclosingasimilarnumberofdeals,ifnotmore,intheyearahead,encouragedbymoreattractiveassetavailabilityanddecreasedcompetition.Theyexpresscon?denceintheabilityforM&Atocreatevalue.Nearlytwo-thirdsofrespondentsreportthatacquisitionscompletedinthepreviousthreeyearshave

metorexceededexpectations.Basedonourobservationsfromearlierdowncycles,we

have

identi?ed?ve

themestokeepaneyeonin2023:cash-richcompaniesmakingstrategic,boldmoves;continuedprevalenceofsmalltomidsizedeals;abalanceofscaleandscopedeals;furtherpressureonvaluations;andportfolioreshapingthroughseparationanddivestitures.Cash-rich

companies

making

strategic,

bold

movesIn2008–2009,

numerousindustry-de?ningdealspositionedacquirersforfaster,morepro?tablegrowthoutofthedownturn.Inthecurrentcycle,too,companieswithastrongmarketposition,cashonhand,anddebtcapacitywillhave

theupperhandtoexecutetransactions.Thesecompaniesshouldbecon?rmingtheirstrategicM&Aroadmaps,revisitingdealmodels,andlayingthegroundworktomovefastondesirabletargets(largeandsmall).Nearlyeverysectorhasafewcash-richmarketleaders.Energy,

industrials,andtechnologystandoutassectorsinwhichthetopplayershave

solidbalancesheetstomakeboldmoves.StrongperformingcompanieswithanexperiencedtrackrecordofM&Awillbethebestpositionedtodothelargesttransformationaldeals.Sectorswithstrugglingassetsmay

findmore

toleranceamongregulatorsfor

largeconsolidationdeals.13GlobalM&AReport2023Continued

prevalence

of

small

to

midsize

dealsThousandsofdealsvaluedatlessthan$500millionmakeupthebulkofM&Aactivityeachyear.We

expectthistocontinue.CompanieslooktoM&Atoaddressstrategicneedstoexpandmarkets,buildnewenginesforgrowth,and?llcapabilitygaps.Smallertomidsizedealswillbeeasierthanmegadealstocompletegivenrelativelylowerrisk,lessrelianceon?nancing,andlessregulatoryscrutiny.Dealmakersinmanyindustriesmay

shyaway

frompursuingdealsthatcouldwindupinregulatorycrosshairsasextendedpre-closeperiodsincurmanydirectandindirectcosts.Sectorswithstrugglingassets,suchasbankinginEuropeandtelcosindevelopingeconomies,may

?ndmoretoleranceamongregulatorsforlargeconsolidationdeals.A

balance

of

scale

and

scope

dealsAhighinterestrateenvironmentandweakeconomyputapremiumonassetswithcash?owandalineofsighttorapidsynergies,supportinganear-termshifttoscaledeals.Forexample,inhealthcare,movessuchasJohnson&Johnson’s$16.6

billionacquisitionofAbiomedinNovember2022signalareturntocategoryleadership.At

thesametime,ourM&APractitioners’2023OutlookSurveyindicatesthatappetitewillcontinuefordealstobuildandgrownewbusinesses.These“Engine2”dealso?erspeedtomarketande?ciencythatorganicmovescan’tmatch—see“WhenBuying(vs.Building)IstheRightMoveforEngine2.”

Energycompaniesarelikelytobe

aprimeexampleofthisapproachastheyusecashtoconsolidateinexistingmarketswhileshiftingtorenewablesviascopedeals—see“M&AinEnergyandNaturalResources:BeatingtheOddsinEnergyTransitionDeals.”

Similarlyinretail,whilewe

expecttoseeretailerspursuescaledeals,suchasthe$25billionKroger-AlbertsonsdealannouncedinOctober2022,theyarealsolikelytousescopeM&Atoestablish“beyondtrading”Engine2businesses—see“Retail’sNewM&ABalancingAct.”Further

pressure

on

valuationsUncertaintyregardingcostandavailabilityofcapital,aswellastheoverallmacroeconomicoutlook,willlikelycausedealmakerstobe

moreconservativeinvaluations.Historysuggeststhatvaluationstypically?nda?oorataround9timesto10timesenterprisevaluetoEBITDA,another2to3turnslowerthanthe2022median.Yet

strategicbuyershopingforastealshouldbepreparedforincreasedcompetitionfrom?nancialbuyersastheyearunfolds.Privateequity?rmsareresilientinfragileeconomicenvironmentsandwillcontinuetohave

recordamountsofdrypowder,anappetitefordeals,andawillingnesstopay

fordesiredassets.14GlobalM&AReport2023Portfolio

reshaping

through

separatio