Source: The New York Times’ DealBook
High stock prices and low interest rates have fueled record deal making recently. This isn’t just opportunistic, with companies using M&A to prepare for the postpandemic economy, according to a Harvard Business Review report. HBR surveyed about 500 executives to see what is driving deals.
Bigger is better. The pandemic highlighted how large companies can better manage challenges like labor shortages and supply chain troubles. Some 70 percent of survey respondents said they had seen or expected to see consolidation in their industry, and just over half said their top priority in making deals was adding market share.
A premium on new technologies. Digital technology was a focus before the pandemic, but its prominence during lockdowns and other pandemic disruptions has made it even more important. Just under half of respondents said the need to acquire new technologies would help drive M.&A. in their industry over the next two years.
Realigning for a new world. Nearly 60 percent of respondents agreed that the pandemic had led executives to look beyond their industry for deals. And the most popular driver of deals in the coming years, respondents said, would be the need to pivot into new business lines “to operate in the new normal.”
With corporate deal makers preparing for greater consolidation, and a race to acquire new technologies and expansion into new industries, it’s no wonder that clashes between business groups and the Biden administration, whose antitrust enforcers have made reining in corporate power a priority, are heating up.