
The 2022 M&A Report: Dealmaking Remains Active as Dark Clouds Form
Corporate and financial acquirers are pursuing M&A targets more cautiously, but they have not closed shop.
Related Expertise: M&A(買収・合併), 事業戦略
For many companies, creating value from mergers and acquisitions has been an elusive goal. BCG has long studied M&A activity to understand evolving trends and what the activity means for value creation in the short and long terms.
Since 2003, our annual M&A report has presented analyses of buy-side and sell-side transactions based on our BCG M&A database, now comprising more than 840,000 deals dating back to 1980. This year’s report examines the issues of ESG in M&A, sustainability, and how companies can use green M&A to advance their environmental agendas. Collectively, our M&A reports offer a longitudinal view of the market’s evolution and how successful dealmakers create value.
The dashboard allows you to study environmentally motivated M&A activity. Explore green M&A by industry, region, time frame, and deal value. See how these deals have grown—especially in the past decade—driven by the power and utilities industry and companies in different regions across the globe. Also, see all M&A activity by year in our comprehensive M&A analysis. The bottom line: Companies that do not use M&A as a primary tool to achieve their environmental goals may be missing out on significant value-creation opportunities.
In four chapters, BCG's M&A experts explore current M&A activity and reveal how successful dealmakers create value in an era of ESG-related deals.
Corporate and financial acquirers are pursuing M&A targets more cautiously, but they have not closed shop.
Environmentally focused M&A activity has heated up over the past few years, intensifying competition and driving up prices.
Many acquirers are generating short- and long-term returns from environmentally focused M&A, but others are struggling to succeed.
By applying the lessons learned from success stories, companies can use M&A and other transactions to accelerate their environmental transformations.
Since our first annual M&A report in 2003, we have complemented our analyses of M&A activity and trends with strategic insights into how companies can create value from mergers, acquisitions, and divestitures. The reports have covered a broad range of macroeconomic environments and industry perspectives, focusing on both traditional and alternative deal types. Across the reports, our analyses pinpoint what infrequent dealmakers can learn from their more experienced counterparts’ successful approaches.
Many companies are eyeing divestitures in the current environment. Are they likely to create value? What is the best path to success?
Companies are increasingly turning to innovative approaches to corporate collaboration to meet the challenges of the current crisis and adapt to disruptive megatrends.
Success requires careful preparation, thorough execution, and, especially, bold decision making in uncertain times.
Dealmakers seeking to convince their board and shareholders that an acquisition creates value have a clear imperative: prove that synergies justify a high valuation.
The 2017 M&A Report: The Technology Takeover
The 2016 M&A Report: Masters of the Corporate Portfolio
The 2015 M&A Report: Increasing Returns with M&A
The 2014 M&A Report: Don’t Miss the Exit
Winning at M&A in Emerging Markets: BRICs Versus Mortar? [2013]
Riding the Next Wave in M&A: Where Are the Opportunities to Create Value? [2011]
Seize the Opportunities in M&A: Accelerating Out of the Great Recession [2010]
The authors of our annual mergers & acquisitions reports examine M&A activity to spotlight trends and opportunities. Meet some of our ESG in M&A experts.
During the first nine months of 2022, BCG’s Transaction Center conducted the research that underpins BCG’s 2022 M&A Report.
The data set we used as the basis for the analyses in BCG’s M&A research (the “M&A database”) comprises approximately 924,000 M&A deals covering the period from January 1980 through June 2022. In assessing general market trends, we analyzed reported M&A transactions from 1990 through the first half of 2022. For the analysis of deal values and volumes, we excluded transactions marked as self-tenders, recapitalizations, exchange offers, repurchases, privatizations, and spinoffs.
In addition to using our proprietary data and analytics, we collected and collated financial data and relied on information from various data providers, including Refinitiv Eikon, Refinitiv DataStream, and S&P Capital IQ.
Our review of the definitions of ESG and sustainability indicates that they have similar meanings and tend to be used interchangeably. BCG defines sustainability as “an organization's delivery of value in financial, environmental, social, and governance terms to itself, its stakeholders, and society at large, in the short and the long term.”
To identify ESG M&A activities, we developed a dictionary of 591 ESG terms (for example, carbon capture within the environmental component of ESG, occupational health within the social component, and board diversity within the governance component). The terms reflect usage in existing ESG frameworks (such as the United Nation’s Sustainable Development Goals and the European Union’s taxonomy for sustainable activities), banks’ and investors’ definitions of ESG investing, and academic research. In addition, we adopted Refinitiv’s classification of sustainable finance when defining environmental deals, and we included health care and education in the definition of social deals; the latter follows the approach that the UN’s Sustainable Development Goals uses. We applied this dictionary to screen the “target business description,” “deal synopsis,” and other relevant data fields available from data providers.
In total, the initial deal sample for this year’s analyses included 151,604 ESG M&A transactions, of which 38,968 are environmental M&A transactions (the report refers to these as “green deals”). We excluded transactions marked as self-tenders, recapitalizations, exchange offers, repurchases, privatizations, and spinoffs, and we focused on the period from 2001 through 2021. This yielded a final sample of 119,201 ESG transactions and 32,766 environmental transactions. Depending on the analysis, the sample size varies as a result of additional data requirements.
Short-Term Value Creation
Although analyzing different issues required the use of distinct samples, we employed the same econometric methodology to all return analyses.
To determine the “announcement return,” we derived the cumulative abnormal return (CAR), by taking the difference between the actual return on the acquirer’s stock (Pacq) and the return realized in the sector index (Pindex) as an approximation for expected returns, starting three days before the announcement date (–3d) and ending three days after it (3d). (See Equation 1.)
EQUATION 1
We applied common-practice statistical significance tests to all of our quantitative results in this report. To assess whether means were statistically different from zero, we used one-sample t-tests; and where appropriate, we used two-sample t-tests to determine whether the difference between means was significantly different from zero—that is, whether two groups did in fact have different means.
Generally, for longer-term analyses (such as one- and two-year RTSR) and for the short-term analysis (that is, CAR), we used relative measures of size impact (such as deal value compared to the enterprise value of the acquirer) as well as absolute measures of size (such as deal value) to determine whether a transaction was sufficiently material to have had an impact on overall performance.
The authors are grateful for the support provided by Paderborn University.
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