- Interest in mergers and acquisitions (M&A) has picked up since the start of the pandemic, but the increase comes with a twist: companies are more interested in pursuing nontraditional deals, like joint ventures, Deloitte research shows.
- Forty-two percent of corporate and private equity executives say they're looking at alliances, partnerships, joint ventures, and special purpose acquisition companies (SPACs) instead of acquisition.
- Economic and political uncertainty is driving the change, the survey of 1,000 corporate and private equity leaders shows.
Executives want to take a multifaceted approach to safeguard markets, accelerate recovery, and position themselves to capture market leadership in a world with fundamentally reshaped economies and societies.
Executives in financial services, real estate, and technology have the most interest in pursuing a non-traditional strategy; those in manufacturing and energy are mostly sticking with regular acquisitions.
In another shift, interest in cross-border deals is waning; almost 20% of executives say they're not interested in foreign acquisitions, compared to 9% who said that last year; and almost 60% say fewer than half of the deals they're working on are cross-border.
Although the survey didn't address this issue, it is possible the rise in political interference in deals, such as the involvement of the federal government in driving acquisition of Chinese-owned TikTok's U.S. social media business, could be making executives hesitant to wade into foreign deals.
Despite the uncertainty, interest in deals is up since the beginning of the pandemic. Sixty percent of executives say they're more focused on deals today than they were then, compared to 40% who say the opposite. Just a handful say they're not doing anything until there's more political and economic clarity.
For those doing deals, strategies differ based on whether their company is thriving or struggling. If they're thriving, they're looking mainly for vertical integration targets, distressed assets, and companies that can fill technology gaps, among other things. If they're struggling, they're looking for co-investment opportunities, partnerships to develop non-core strengths, joint ventures and alliances with suppliers, and divestitures, among other things.
About 60% say they're playing offense in their strategy; 40% say they're playing defense.