2021 was a record year for mergers and acquisitions (M&A) activity. According to several reports, the volume of transactions worldwide grew by 24% compared to 2020, with the most significant deals occurring in the renewables, banking, technology, and healthcare sectors.
For this 2022, despite the war in Ukraine and the COVID-19 pandemic, Silvia Martínez Losas, founding partner of Lexcrea; Estibaliz Aranburu, partner of Gómez-Acebo & Pombo; Carolina Albuerne González, partner of Uría Menéndez; Roberto MacLean, founding partner of Miranda & Amado, believes that the M&A market will maintain a good pace not only because of the abundance of capital but also because of the search by many companies to strengthen their technological base and expand their innovation capacity.
2022, a year of great intensity for the M&A market
With the momentum gained in 2021, everything points to continued growth this year, according to Silvia Martínez Losas. “2021 was a record year, with more than $5.9 trillion in over 63,000 transactions worldwide, according to data from the consulting firm Refinitiv.In Spain and Latin America, the same trend was followed. Spain saw its M&A volume increase by 40%, with 1,506 transactions closed valued at $99.492 billion (around €87 billion), exceeding pre-COVID levels.
At Lexcrea, we are optimistic about 2022. Despite the challenges and uncertainties still posed by the COVID-19 pandemic and tragic realities such as the war in Ukraine, we believe that 2022 will once again be a very active year in the mergers and acquisitions market. The key factors? The abundance of capital and the desire of many companies to strengthen their technological base and expand their innovation capacity.
Estibaliz Aranburu agreed that 2021 was a record year for M&A activity. In fact, according to several reports, the volume of transactions worldwide grew by 24% compared to 2020, reaching all-time highs in both value and number of deals.
“In 2022, several factors are creating some uncertainty, such as increased scrutiny of transactions by competition and foreign investment authorities, potential tax changes or interest rate hikes, and we still don’t know the impact the Ukraine crisis may have. However, there are reasons to be optimistic, as liquidity remains in the market and companies are under pressure to focus on strategic activities and divest from the rest, taking advantage of high valuations. It is therefore expected that 2022 will continue to be a good year for the mergers and acquisitions market.”
For Carolina Albuerne González, 2021 was a year with a very high workload in M&A in Spain. “The economic environment of 2021, as surprising as it may seem, contributed enormously to this development (monetary conditions that favored financing, structural changes in many sectors due to COVID, transition to a green economy and restructurings, among others) and particularly in the renewables, banking, technology and healthcare sectors.
‘Top Women in the Legal and Financial Sector in M&A Advisory Firms in Spain 2021’ Carolina Albuerne , who leads the ranking of the most active legal advisors in the Spanish M&A market with €4.3 billion in mobilized capital, said that such recognition is “always a source of pride that clients trust us to accompany them in their most important transactions. And that type of data, ultimately, is what it reflects.”
While Roberto MacLean stated that “it is too early to make any definitive predictions, the number of new orders we have received suggests it will be a busier year. Both 2020 and 2021 started very well in the first few months, but then the pandemic hit and President Castillo was elected, both of which caused a slowdown in corporate buying and selling transactions. This year, we are closely monitoring the potential adverse effects that the war in Ukraine could have on the global economy and, consequently, on the Peruvian economy.”
Technology, health sciences, renewable energy and infrastructure will shape mergers and acquisitions
“We expect to continue seeing a lot of dynamism in the technology sector. Many companies are now, thanks in part to the pandemic, more aware than ever of the importance of strengthening their technological foundation and the need to create new business models. To this end, in addition to organic growth, many companies are opting for integrations that not only bring new products and services, but also teams and initiatives that can be key to their future.”
“In addition to technology, which is relevant across all sectors, we expect to see significant activity in industries such as health, food, renewable energy, and education,” said Silvia Martínez Losas.
For her part, Estibaliz Aranburu believes that “the energy and technology sectors will remain very active. There is also significant interest and activity in the areas of health sciences, telecommunications, and infrastructure. Very significant transactions are expected in these last two sectors in the coming months. It is also foreseeable that, in the sectors most affected by the pandemic, consolidation processes will occur or interesting opportunities will arise.”
Carolina Albuerne González, while acknowledging the difficulty of making a clear prediction about how 2022 will unfold, states that “it seems unlikely we will reach the activity levels of 2021. In my opinion, at least during the first half of the year, I believe the appetite for M&A will continue, especially in areas related to the transition to a green economy and the real estate sector. However, the outlook for the second half of the year will depend heavily on the evolution of inflation and monetary policy, both from the Fed and the ECB. A context of rising interest rates could lead to the re-rating of the financial sector and encourage deals between institutions.”
In sectoral terms, the most active sector or sectors in these first months of the year, according to Silvia Martínez Losas, is the technology sector, so she estimates that this will be a trend that will continue in the coming months and even years.
To this comment, Estibaliz Aranburu added that the sectors where they have seen the most activity are the same as at the end of 2021. In fact, many of the deals that began at that time are still in the due diligence, negotiation, or closing phase. In this regard, “we continue to see a lot of movement in the renewable energy, technology, and life sciences sectors, as well as in telecommunications. However, as I mentioned above, we also expect interesting deals to emerge in other sectors this year.”
For his part, Roberto MacLean said that, according to public sources and his own experience, it appears that the most active sectors are finance and insurance, mining, agribusiness and technology.
Gender perspectives in the transactional market
For Estibaliz Aranburu, the gender gap in the M&A sector “is due to multiple factors, each of which influences it to a greater or lesser degree. An article published in Harvard Business Review some time ago, entitled “Women and the Labyrinth of Leadership,” indicated that the glass ceiling metaphor might not be helpful, because it seemed to suggest that women’s careers are a straight, uncomplicated upward trajectory until they reach the glass ceiling, whereas the authors argued that a professional career is more like a labyrinth, in which women can get lost along the way for various reasons: biases or prejudices that occur at different stages of a career, the need to balance personal and professional life, a lack of investment in professional networks, networking, etc.”
In any case, among the various reasons that could explain the lower presence of women in the world of Transactional Law, I would highlight the following: (i) a higher personal cost or greater difficulty in balancing professional and personal life, which is particularly pronounced in such a demanding field as transactional law; and (ii) the gender gap that exists at the source of employment (one need only look at who is in charge of private equity and venture capital funds, investment banking, or the CEOs or heads of legal departments of large corporations). In this sense, the gap in the legal profession would simply be a reflection of the gap that exists upstream.
As we all know, referrals are usually based on relationships of trust, and these can be personal or based on affinity, or on expertise. In the first aspect, I believe it’s easier for relationships of affinity to develop between equals or similar individuals, and this provides an advantage in the second area, which is prior experience. In any case, trust is also earned through work, by demonstrating one’s worth, so it’s important to involve female lawyers in these matters, give them visibility, and allow and encourage them to have direct contact with clients from the very beginning, so they can build their own professional networks. In our case, we have some very, very successful partners. Furthermore, the client profile is changing, and increasingly, especially in some sectors, the referrers are women, so I believe these difficulties will diminish as society progresses.
Silvia Martínez Losas, meanwhile, stated that the gender gap in the transactional market is a consequence of the reality within large M&A firms, where the participation of female partners is very low. Working on M&A deals almost invariably means sacrificing the much-discussed work-life balance. That said, I am convinced that, in the near future, more and more women will play a significant role in these types of transactions. I encourage companies with M&A deals to invest in female talent and help us close this gender gap!
Carolina Albuerne González stated that the mere existence of two separate rankings for men and women confirms this reality. “However, in my opinion, the increased female presence in this sector is happening gradually and naturally. Although there may still be some imbalance at the highest levels, the number of female lawyers in practice is growing. And this is the strongest guarantee of natural equality.”
Roberto MacLean pointed out that “in our team, one of the four partners is a woman, and in the junior lawyers’ team the proportion is equal for both genders. I understand that it’s similar in other corporate firms. As they gain more experience and market recognition, that presence will become more noticeable.”
‘Top Women in the Legal and Financial Sector in M&A Advisory Firms in Spain 2021’ Silvia Martínez Losas , who leads the ranking of the most active female legal advisors in the Spanish M&A market by number of transactions (33 deals), stated that she felt very “proud to lead the ranking for the second year in a row. But this is an honor I must extend to the entire incredible team of lawyers and professionals that make up Lexcrea. We are leaders not only thanks to our expert knowledge, but also because of the agility, approachability, creativity, and passion that the entire team brings and that are highlighted by the clients with whom we have the pleasure of working.”
Regulations for 2022 in Spain
Silvia Martínez Losas pointed out that among the regulations expected to be published this year in Spain, the Law for the Promotion of the Startup Ecosystem stands out. This law aims to establish a specific framework to support the creation and growth of startups. Related to this law, the Law on the Creation and Growth of Companies is also expected to be published, which will eliminate barriers to business creation, growth, and restructuring.
Also expected is the Law amending the insolvency law which will introduce important changes stemming from the European directive on restructuring and insolvency.
The firms are committed to consolidating their leadership position
Lexcrea aims to maintain its position as “leaders in the M&A field. Our extensive activity in this area has allowed us to develop unique expertise in the operations of these types of transactions. But in addition to this expertise, our clients highlight the agility, close relationship, and personalized approach with which the Lexcrea team manages these operations, which is part of our hallmark.”
Meanwhile, at Gómez-Acebo & Pombo, they always prioritize “excellence, close client relationships, and teamwork. The M&A practice doesn’t work in isolation; we collaborate very closely with our colleagues in regulatory, tax, labor, and IP areas, to name a few. In fact, we’ve formed practice groups to provide higher value-added services in sectors with the most transactional activity, at least in the short term, such as energy, healthcare, food, technology, telecommunications, and infrastructure, as well as financial and insurance entities. We also have a practice group focused on ESG issues, which will undoubtedly become increasingly crucial in investment decisions,” concluded Estibaliz Aranburu.
Finally, Roberto MacLean said, “We are committed to several things: (i) we want to support our clients and help them achieve their business objectives; (ii) we want to help Peruvian entrepreneurs grow both within and outside the country; (iii) we want to help our foreign clients have successful operations in our country; and (iv) we seek to be involved in transactions where we feel we add value and play an important role, regardless of the amount involved.”
