M&A boom will surge into 2022: KPMG

Dive Brief:

  • The boom in global mergers and acquisitions in 2021 will surge into 2022, fueled by abundant investment capital, historically low interest rates and a rebound in global economic growth, according to a survey of 345 corporate dealmakers in the U.S. by KPMG.
  • “Based on the volume of new pitches in November and December — transactions that would come to market in Q1 and Q2 of 2022 — there are no signs of a slowing deal market,” according to Philip Isom, global head of M&A at KPMG. While facing high valuations, “most investors have limited time horizons to invest in, so they may be willing to reach further on price than they have historically.”
  • More than 80% of the survey respondents across several industries expect total M&A valuations to rise further next year, with about one out of every three predicting at least a 10% increase, KPMG said. Dealmakers said transaction levels will remain robust because companies “need to remain on the offense with the competition” and “feel pressure from investors to raise their own valuations.”

Dive Insight:

Worldwide deal value from January until mid-November this year hit $5.1 trillion, the highest level since 2015 and a 34% gain compared with all of 2020, KPMG said. U.S. transactions rose to $2.9 trillion, or 55% more than during all of last year.

M&A has soared in 2021 as the economy recovered from a pandemic shock, record monetary and fiscal stimulus pumped up liquidity and many companies sought through acquisitions to regain their footing after months of lockdowns and persistent supply chain disruptions.

A widespread labor shortage will probably push up dealmaking next year. One-third of survey respondents said they want to use M&A to acquire talent, KPMG said.

Also, companies increasingly use acquisitions to change their business or operating models, KPMG said, noting that industrial and financial services companies buy companies that help speed their digital transformation.

“The aim is to increase efficiencies and contribute to having more agile workforces,” according to Carole Streicher, KPMG’s deal advisory and strategy service group leader in the U.S.

Private equity firms will continue to push up the volume and value of M&A next year, after increasing their involvement in transaction value by more than 55% so far in 2021, KPMG said. PE firms have pursued deals this year in part because of the prospect of an increase in corporate capital gains taxes.

Growing support for sustainability among investors, regulators and other stakeholders may prompt M&A, “as businesses look at their ecological footprint and consider purchasing, rationalizing or divesting assets,” KPMG said. Investors are likely to consider sustainable businesses more adaptable to market shifts.

Finally, concerns about the potential for rising borrowing costs may prompt dealmakers who rely on debt financing to speed up acquisition plans. Federal Reserve Chair Jerome Powell late last month said policymakers at their two-day meeting beginning Tuesday will likely consider speeding up the withdrawal of accommodation.

Dealmakers face some headwinds. Democrats in the Senate have yet to muster enough support for a roughly $2 trillion social policy bill that would help sustain economic growth. Meanwhile, the outbreak of the omicron variant of COVID-19 has highlighted the fragility of financial markets and the economy to any setbacks in curbing the pandemic.

Survey respondents identified several factors that will influence dealmaking next year, with 61% underscoring high valuations, 56% pointing to liquidity and other economic considerations, and 55% noting intense competition for a limited number of highly valued acquisition targets, KPMG said.

Still, only 7% of the survey respondents said they expect deal volumes to decline in their industries next year.

Survey respondents work at companies in industries ranging from media and financial services to energy and technology, with 194 of them CFOs, CEOs or other C-suite executives.

CFOs rank ‘retention, retention, retention’ as top priority for 2022: Deloitte

Gartner's 2022 Top Strategic Technology Trends. Old Problems. Old Trends.  New Names.

Dive Brief:

  • CFOs rank the challenge of attracting and retaining employees far above other internal risks for 2022, citing labor shortages and the difficulty of crafting a balance between remote and in-office work, Deloitte found in a quarterly survey.  
  • “The number of times CFOs cited talent/labor and related issues heavily outweighed other priorities for 2022,” Deloitte said Thursday in a report on the survey of Fortune 500 CFOs. “‘Retention, retention, retention’ was a resounding refrain, including through wages and incentives.”
  • Eighty-eight percent of the 130 respondents said they will use a hybrid work model next year, 92% will increase automation and 41% expect to shrink their companies’ real estate footprint, Deloitte said.

Dive Insight:

The slow return of workers from coronavirus lockdowns has led to labor shortages, competition for hires and an increase in wages.

Employees are switching jobs for higher pay at a near-record pace. The quits rate, or the number of workers who left their jobs as a percent of total employment, rose from 2.3% in January to 2.8% in October, the second-highest level in data going back to 2000, the U.S. Labor Department said. The quits rate hit a high of 3% in September.

Attracting and retaining employees vaulted to the No. 2 ranking of business risks for 2022 and the next decade, from No. 8 a year ago, according to a global survey of 1,453 C-suite executives and board members by Protiviti and NC State University. (Leading the list of risks for 2022 is the impact on business from pandemic-related government policy).

Companies are trying to hold on to workers, and attract hires, by raising pay. Private sector hourly wages rose 4.8% in November compared with 12 months before, according to the Labor Department.

Tight labor markets and the highest inflation in three decades have prompted companies to budget 3.9% wage increases for 2022 — the biggest jump since 2008, according to a survey by The Conference Board.

The proportion of small businesses that raised pay in October hit a 48-year high, with a net 44% increasing compensation and a net 32% planning to do so in the next three months, the National Federation of Independent Business said last month.

CFO respondents to the Deloitte survey said they plan to push up wages/salaries by 5.2%, a nine percentage point increase from their 4.3% forecast during the prior quarter.

“Talent/labor — and several related issues, including attrition, burnout and wage inflation — has become an even greater concern of CFOs this quarter, and the challenges to attract and retain talent could impinge on their organizations’ ability to execute their strategy on schedule,” Deloitte said.

The proportion of CFOs who feel optimistic about their companies’ financial prospects dropped to just under half from 66% over the same time frame.

“CFOs over the last several quarters have become a little more bearish,” Steve Gallucci, managing partner for Deloitte’s CFO program, said in an interview, citing the coronavirus, competition for talent, inflation and disruptions in supply chains.

CFOs have concluded that the pandemic will persist for some time and that they need to “build that organizational muscle to be more nimble, more agile,” he said.

At the same time, CFOs expect their companies’ year-over-year growth will outpace the increase in wages and salaries, estimating revenue and earnings next year will rise 7.8% and 9.6%, respectively, Deloitte said.

“We are seeing in many cases record earnings, record revenue numbers,” Gallucci said.

Describing their plans for capital in 2022, half of CFOs said that they will repurchase shares, 37% say they will take on new debt and 22% plan to “reduce or pay down a significant proportion of their bonds/debt,” Deloitte said.

CFOs view inflation as the most worrisome external risk, followed by supply chain bottlenecks and changes in government regulation, Deloitte said. The Nov. 8-22 survey was concluded before news of the outbreak of the omicron variant of COVID-19.

What should you take if you get Covid-19? 

https://link.vox.com/view/608adc4e91954c3cef03e60dfi7ya.jor/68bd1086

Hey readers, 

Last week, Florida Surgeon General Joseph Ladapo released a public service announcement talking about protecting your health from Covid-19. The PSA stood out for a couple of reasons:

1. While “vaccination” briefly appeared onscreen in a list of options, it didn’t merit a mention in the video.

2. The surgeon general listed guidance on “emerging” treatments that was … remarkably on point.

The absence of focus on vaccines in the video is unfortunate, if entirely in keeping with the GOP’s willingness to play to its anti-vax base. That’s bad, but not surprising.

What was surprising was No. 2. The information Ladapo shared about treatments was fairly accurate. In the video, he told Floridians to ask their doctor about monoclonal antibodies, fluvoxamine, and inhaled budesonide should they come down with Covid-19. 

I’ve been reporting on the Covid-19 treatment beat for much of this year, and I’ve uncovered a massively confusing pile of contradictory information. But those are the top three treatments I’d recommend sick loved ones talk to doctors about, and while there’s much we still don’t know, solid science suggests they have real promise.

That said, the fact that such important (and accurate) information stood out in a government PSA indicates just how dismal the state of public communications on treatments is — and just how much misinformation and distrust are hampering the fight against Covid-19. 

What should you take if you get Covid-19? 

There’s been little public health communication about which treatments to pursue if you get Covid-19, perhaps because for much of the pandemic, it’s been unclear what options are better for mild Covid than just resting at home. While in 2021 the best treatment recommendations have gotten clearer, public health messaging over the last year has rightly been focused on vaccination.

The official CDC page on what to do if you get sick with Covid-19 advises you to wear a mask, wash your hands, and clean high-touch surfaces to avoid infecting those around you. If your breathing deteriorates or you show signs of severe illness like confusion or an inability to stay awake, the CDC advises you to go to the hospital. 

All sound guidance — but what it doesn’t offer is advice on a question that patients who aren’t sick enough for hospitalization might desperately need to know: What medication should I take if I come down with Covid-19? 


That’s not because there’s a lack of options. For instance, the FDA has approved monoclonal antibodies as a treatment for Covid-19 patients at risk of progressing to severe disease. They recently expanded this approval to include monoclonal antibodies for children as well. The treatment has to be administered in a clinic, as an IV infusion or as four shots, but it is highly effective, with some high-quality studies finding an 85 percent reduction in the risk of hospitalization or death.

Meanwhile, large, high-quality, peer-reviewed, and published randomized controlled trials (RCTs) have found promise for cheap therapies that are already FDA approved for other purposes and have an established safety profile. 

One medication, fluvoxamine, is an antidepressant that appears to reduce hospitalizations from Covid-19 by about 30 percent. Another, budesonide asthma inhalers, was found in one large RCT to speed at-home recovery considerably and in another to reduce risk of hospitalization. In the US, there’s been no formal guidance on when to consider budesonide, but in the UK, health agencies have advised doctors they can consider prescribing it off-label to help older and at-risk patients recover at home, while in Canada doctors are encouraged to consider budesonide on a case-by-case basis.

Research underway will help provide a better understanding of both of these therapies, but there’s enough evidence that some doctors are already prescribing them to patients. If you have the opportunity to enroll in an ongoing clinical trial of these medications, you can get access to a potentially promising treatment and help contribute to our scientific understanding of whether these treatments really work.

Another exciting treatment in the pipeline is Paxlovid, an antiviral developed by Pfizer that showed impressive 90 percent efficacy in preventing hospitalization — so effective that in November, the clinical trial stopped enrolling new participants because investigators concluded it’d be unethical to put them in the control group. It has not yet been approved by the FDA, but it might be a game changer if, as is expected, it’s approved in January.

The FDA is also in the process of considering molnupiravir, another repurposed drug that looks to be moderately effective, though there are some concerns it could spur new viral variants.

Why is it so hard to find good guidance about treatments?

The US government has communicated little about Covid-19 treatment options. NIH guidelines about treatments like fluvoxamine haven’t been updated since this past spring, meaning results from recent high-quality studies haven’t been incorporated into that guidance. Without it, physicians considering whether to prescribe these medications can’t turn to official public health resources for help. 


From a certain perspective, that reticence is understandable. Learning which Covid-19 treatments work is very hard. While large-scale RCTs found promising evidence for fluvoxamine and inhaled budesonide, “promising” is still the most we can say — it could absolutely turn out that the real-world effects are much smaller than hoped for, or even fail to materialize altogether.

But it’s precisely because this area is so difficult to navigate for doctors and patients that the CDC, FDA, and NIH could play an important role in pointing out good treatments — yet it’s a role they have been puzzlingly reluctant to play.

Perhaps because of the dearth of formal federal government guidance on treatments — and because of politically driven crazes over drugs like hydroxychloroquine and ivermectin, which evidence thus far suggests do little to fight Covid-19 — Florida media has been critical of Ladapo’s PSA and its recommendations.

Politicians who pander to anti-vax sentiment are harming their constituents, and it’s very reasonable to be frustrated with their conduct. Ladapo is a DeSantis appointee who has forcefully opposed Covid-19 restrictions — and has refused to wear a mask in meetings with immunocompromised legislators — and lots of people are reasonably reading his PSA in that light. 

But that justified irritation shouldn’t get in the way of a needed conversation about the possible benefits and drawbacks of monoclonal antibodies, fluvoxamine, and budesonide. As the US braces for an omicron surge that is likely to hit even vaccinated people, effective treatment is going to be essential for saving lives. Yes, promoting vaccines is a must, but tens of thousands of Americans are getting sick each day, which makes clear, accurate communication about which treatments to ask your doctor about extremely important. 

The more society and public health get aligned on what works, the better off we’ll be in confronting omicron and other future variants.