Global manufacturers are facing a range of pressures: a supply chain shortage, recovering from the pandemic, an uncertain post-pandemic future, and increased competition for limited resources. This combination of challenges has strongly affected how global manufacturers think about M&A.

So what specific factors are coloring perceptions as we move into 2022 and, hopefully, into a new wave of fewer pandemic-related considerations? These issues figure prominently:

  • Ecosystem changes. As a result, many businesses are looking to partner with others to create new ecosystem solutions.
  • Business resilience. Manufacturing executives considering an acquisition are increasingly measuring the target company’s resilience when assessing value and weighing whether to invest.
  • Bolt-on acquisitions. These are becoming  more popular options, allowing two companies in the same sector to decrease competition and increase market share. Transformative deals are becoming less popular, and purchases in adjacent sectors have dramatically decreased.
  • Geopolitics and international strategy. Government policies are increasing domestic production to boost national competitiveness. These regulations color perceptions of global M&A. Some companies are focusing more on domestic transactions, while others are looking only to international transactions where the regulatory environment is favorable.
  • Major strategic drivers. Our clients consistently report to us that regulations, trade changes, supply chain issues, and tariffs continue to color M&A decisions. The United States remains a popular destination for international manufacturing acquirers, who hope to be closer to customers. India is a close second. Manufacturers intend to expand their reach to Europe and Asia in the next few years, especially if the regulatory environment and pandemic-related disruptions move in the right direction.

In 2022, we anticipate M&A will move in two distinct directions. For some manufacturers, supply chain disruptions and the ongoing effects of the pandemic will temper any M&A ambitions. For others, M&A will provide a path out of prior disruptions. Overall, we anticipate an M&A rebound, and believe that businesses which are well-prepared for these transactions can still gain immense benefits from them.