M&A Outlook: How Companies Are Positioning For Growth

Episode Summary

Executive Summary: Goldman Sachs M&A co-heads Stefan Feldgois and Mark Sorrell say M&A momentum remained strong into mid-2021, driven by growth ambitions, strategic repositioning, supply-chain resilience, technology, ESG, and abundant capital. They expect large, bold deals and private equity activity to stay elevated, with cross-border M&A and selective SPAC activity rebounding as travel improves and markets adapt to regulatory and tax shifts.

Main Topics: Sustained M&A momentum (Priority: 5/5): The guests say the rebound seen earlier in the year did not fade; activity continued at a strong pace across regions, sectors, and deal sizes, with a clear preference for larger, more strategic transactions. Drivers behind dealmaking (Priority: 5/5): They frame M&A as both offensive and defensive: companies want growth, scale, and new product lines, while also reconfiguring supply chains and reducing vulnerability to geopolitical and pandemic disruptions. Private equity and leverage buyouts (Priority: 5/5): They attribute robust sponsor activity to record capital pools, strong historic returns, shortening hold periods, and increasing competition for assets, including public-to-private deals in Europe. SPACs and market rotation (Priority: 4/5): SPACs remain part of the market but at lower levels than peak enthusiasm; other forms of corporate and sponsor-led M&A have filled much of the gap, especially in the $500 million to $10 billion range. ESG, activism, and portfolio reshaping (Priority: 4/5): They note ESG is now embedded in boardroom discussions and activist campaigns, alongside a return of large-cap activism and more spin-offs/divestitures focused on portfolio optimization. Regulatory and tax environment (Priority: 3/5): Both speakers argue regulatory and tax changes matter, but are not derailers; market participants are experienced at adapting, and these issues are only one factor among many in deal decisions. Cross-border comeback (Priority: 4/5): Mark Sorrell highlights that true cross-border M&A was temporarily constrained by travel limitations and expects it to rebound quickly as mobility improves.

Key Arguments: M&A volume has continued to build because clients increasingly view acquisitions as a core tool for growth, not just a response to pent-up demand. Strategic repositioning is a bigger explanation than pandemic recovery alone; boards and shareholders are backing companies to reshape portfolios and strengthen resilience. Supply-chain diversification has become strategic, pushing some defensive deals even at higher cost. Scale matters more after the financial crisis and the pandemic, reinforcing the value of balance-sheet strength and geographic/product diversification. Technology is present in many deals even outside pure tech sectors, making it a pervasive theme in modern M&A. Private equity has deep capital pools and must deploy them, which supports sustained transaction flow and competition for assets. The pace of sponsor investing may also be helped by shorter entry-to-exit cycles, which increase turnover of assets. Public-to-private transactions are especially strong in Europe and may spread further. SPACs are no longer the dominant driver, but they still contribute to volume for select assets and should remain part of the market. Regulatory and tax shifts are real but manageable; historical precedent suggests dealmakers adapt rather than stop transacting.

Data Points: Podcast recording date: Friday, July 30, 2021 - Disclosed in the closing disclaimer. Private equity sponsor interest: 100 plus SPACs - Stefan says there are still over 100 SPACs with capital raised and deadlines to find targets. Typical M&A deal size range: $500 million to $10 billion - Mark says this is the main engine room of M&A and expects it to remain active. Large-cap activism: High-profile situations in the US and Europe - Mark says there has been a noticeable return of sophisticated activism around mega-cap companies. Cross-border M&A activity: Quieter during the pandemic - Mark attributes the slowdown mainly to inability to travel. Virtual execution capability: Hundreds of transactions 100% virtually - Stefan cites pandemic-era adaptation by bankers and clients. Private equity returns: Consistently strong over several decades - Used to explain why private equity has attracted more capital and competition.

Pivotal Quotes: "Organic growth is hard. And so M&A remains a very attractive method to grow." — Stefan Feldgois: Explaining why strategic repositioning and growth ambitions are sustaining deal activity. "Scale matters." — Stefan Feldgois: Discussing why companies are pursuing bigger transactions after crisis-era lessons about resilience. "I think that big cross-border M&A will come back quite quickly." — Mark Sorrell: On the expected rebound in transatlantic and other international deals as travel becomes easier.

Implications: Deal activity should stay robust, led by growth-minded corporates, active sponsors, and selective cross-border and public-to-private opportunities. Regulatory, tax, and SPAC scrutiny may shape structure, but are unlikely to stop the broader M&A cycle.