Finance Monthly - December 2021

21 Finance Monthly. Bus i ne s s & Economy Specialising in mid-market private equity- backed mergers and acquisitions, Trowers & Hamlins’ corporate team consider the impact of the past 18 months on deal activity and the evolving trends through to 2022. The mid- market has long been a bellwether for the overall health of the UK economy and so it proved during 2021 as new highs in dealmaking activity, deal flow and deal valuations within the mid-market were mirrored in the broader business environment. Turbulence always creates opportunities for winners and losers to emerge but, following a brief pause on activity at the outset of the pandemic in 2020, dealmaking rebounded strongly throughout 2021 and Bloomberg Business Week notes that global transactions are set to top $5 trillion by the end of the year. These figures come despite economic volatility and the prospect of tougher competition regulation. Capital, appetite and opportunity have not been in short supply, and investors – particularly within private equity – have been keen to make up for lost time and put excess cash stockpiles to work. The low-interest rates environment is also a factor that has driven activity, alongside the abundance of capital flowing into the economy and chasing deals. This liquidity can also be explained in part by the availability of cheap debt. The coming together of these factors has created a strong pipeline of dealmaking activity and intense competition to get transactions done. Tim Nye, head of corporate at Trowers commented: “ Competition has been so fierce that pent-up demand has led to the amount of capital that can be put to work outweighing the number of deals available. The knock-on impact of this is that confidence has sky-rocketed and valuations have soared. ” He adds: “ These trends show no signs of abating, based on our conversations within the dealmaking community, and we, therefore, expect a continuation of strong M&A activity throughout 2022 ”.