After a year of upheaval and uncertainty triggered by the COVID-19 pandemic, 2021 should be a year of resurgence in global M&A as dealmakers adapt to new considerations for the negotiation and implementation of transactions.
As the world economy emerges from the effects of COVID-19, M&A deal volume and value should remain strong, even in the face of more stringent regulatory processes and reviews. Technology and life sciences M&A are likely to continue as leading sectors for transactions, while in parallel consumer M&A may see a rebound, as businesses work to reshape in response to a world that requires more ability to engage remotely. Foreign direct investment reviews, including FDI regimes expected to roll out in the UK and Continental Europe, will likely become more imposing across a number of key jurisdictions, following the lead of the expanded reach of CFIUS within the United States.
Across sectors and geographies, transactions will be negotiated with heightened consideration of vulnerabilities for unforeseen events. In particular, special focus will be applied to the strength, security, and resiliency of supply chains as major economies pursue strategies to reduce their dependency on assets and resources produced or delivered from afar.
With the inauguration of Joe Biden as the president of the world’s largest economy as well as new Democratic majorities in Congress, shifting U.S. government policies will inevitably impact M&A. The Biden Administration is expected to have an active agenda in the areas of regulatory enforcement for antitrust, environmental, and tax matters. In addition, there will be a marked difference in the foreign policy arena for the United States through more predictable and normalized engagement, coupled with decreased politicization, which together should create a more stable environment for the proliferation of cross-border M&A.