Buying another company has increasingly replaced R&D to become the preferred growth and innovation strategy across many sectors of the global economy. As markets continue to grapple with the aftermath of the pandemic and a treacherous geopolitical landscape, the lack of stability needed to grow organically have seen the number of deals reaching record levels.
In fact, US$5 trillion dollars worth of M&A deals have been completed in the last year alone. While central banks around the world are struggling to contain soaring inflation by raising interest rates from their historic lows, access to cheap money remains historically easy.
The reasons for so many deals over the latest year, despite the raging of the pandemic and political instability in previously stable markets, are many. Acquiring human expertise and skills to ensure a place in key markets, buying in intellectual property to achieve the same, buying up or down a value chain, bringing a key supplier in house, the list is endless.
Deals are happening at all levels of the economy, from the $40bn deal agreed between AT&T and the parent company of the Discovery Channel down to localised agreements, potential affecting companies close to you.
But, as we continue to ride a tidal wave of deals and corporate mergers, where are the industry hotspots where consolidation is most likely? Plimsoll examines thousands of sectors around the world, analysing key companies and identifying M&A opportunities and trends in key financial performance indicators.
Our unique graphical analysis and valuation model specializes in isolating strong and weak companies. The markets with the widest disparity between those two performance levels are the industries we feel are likely to see the most deals. Financially strong businesses consume their undercapitalized peers to find growth and even enter new markets.
Based on our thousands of industry-specific studies, Plimsoll has found the following three markets where there is likely to be an outsized number of deals over the next three years:
46% of companies rated as Strong vs 35% rated as Danger
The seafood industry is caught in a seemingly never-ending churn of macroeconomic crises. First Brexit brought a rewriting of the rules for catch and distribution between the EU and the UK. Then came the coronavirus and the grounding of fleets. Having survived those crises, we now have war in Europe and sanctions which threaten billions of dollars in global trade.
Plimsoll’s latest analysis of the world’s seafood market reveals significant polarization between companies that have come out of the recent crises in strong financial health and those that are in financial difficulty. While 46% of companies analysed were given a Strong rating in the latest Plimsoll Analysis, more than a third of companies are rated 'Danger'. As a result, the industry looks set for a period of consolidation in 2022.
Learn more about Plimsoll’s latest assessment of the seafood market.
Cement & Concrete Manufacturers
43% of companies rated as Strong vs 34% rated as Danger
The global cement market has long been acquisitive. With significant consolidation over several decades, almost 80% of the market is ultimately controlled by just a handful of very large companies.
However, as with all markets, realities evolve and despite record demand for cement in the post-pandemic recovery, the need for new expertise and technologies continues apace. From green equivalents such as graphene and ash cement to totally new building materials that replace the traditional, change is underway in the market.
Plimsoll’s latest analysis of the global cement market shows that despite the insatiable demand for building materials, the industry is still awash with undercapitalized companies that Plimsoll has rated as Danger. In contrast, 43% of cement companies have been rated as Strong. This divergence in financial health across the global market could lead to further large deals in 2022.
Learn more about Plimsoll’s latest assessment of the cement market.
42% of companies rated as Strong vs 30% rated as Danger
The global waste management market is projected to be worth more than half a trillion dollars within the next three years. After COP26 and the accepted need for cleaner business and better management of human-induced waste, demand will continue to grow and diversify regardless of external challenges such as war and pandemics.
As demand grows and evolves, so consolidation looks set to increase. The growing issue of e-waste created by modern electronic shortens has led to an increased need to acquire new expertise. Expanding into emerging markets and even aligned industries could further increase companies’ willingness to acquire established companies.
Plimsoll’s latest analysis of the waste management market shows just under a third of leading companies are financially weak. In contrast, 43% of cement companies have been rated as Strong. This divergence in financial health across the global market could lead to further large deals in 2022.
Learn more about Plimsoll’s latest assessment of the waste market.
Whatever your market or the products/services you offer, there is a growing likelihood that M&A will visit your competitive landscape. Companies are bypassing R&D and the risk of building something from scratch by acquiring established businesses. Keeping abreast of your best M&A options, the likelihood of a key competitor attracting new owners, and the impact any deals would have on your business are vital in 2022.
Plimsoll provides a host of solutions to help business leaders to assess their options quickly and cost-effectively. From whole market studies analysing every M&A target in an industry to bespoke, personalized acquisition finder services, with 35 years of experience, we can help you find your best targets today.