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How Are M&A Trends Going To Change The Market?

The pandemic brought on a wave of challenges for every business, especially those considering selling or buying an agency. The impact has created a ripple effect in the merger and acquisitions market that has shaped trends. 

M&A advisors have spotted a shift within the market that will lead to a possible increase in activity in the business market. Here are a few trends observed by M&A advisors that will change the business outcome in 2022. 

Bouncing Back From The Pandemic

In 2021, there was a significant increase in mergers and acquisitions. There was $5.9 trillion worth of completed deals that surpassed the prior years that never reached $4 trillion. 

Many M&A deals were put on hold or stopped entirely as buyers quickly stepped out of the market as the pandemic hit. However, once life started to return to normal, many began to restart business and change the economic climate. A significant increase in business activity has affected the expectations for this year by M&A advisors. 

Capital Gain Tax Changes

Capital gain tax can have a significant impact on the M&A market, like potential tax increases. Your M&A advisory team should know the new tax implications of purchase or sale and lead you in the right direction. 

If a higher capital gain tax rate is implemented, sellers will have to pay more taxes on the lump sum they received after the closed deal. This will affect when you should sell your agency. 

Rising Interest Rates

A recent highlight for many people is the relatively low-interest rates. However, this may change later this year which may lead to your M&A advisor discussing the benefits of selling in the next year or so. 

How Will Trends Affect The 2022 Market?

M&A advisors are expecting a very active deal year. More buyers and sellers are ready to enter the M&A market, especially advertising and marketing agencies. 

Even with expected higher interest rates, rising inflation, increased taxes, and greater regulation, it’s predicted that the market should remain active. To know if it’s the right time to buy, sell, or merge, you should speak with an M&A advisor.

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