“Doing internal homework is essential to the process for the seller’s in-house counsel. You don’t want the buyer to come in and find something you weren’t aware of,” Anderson said. “When the seller has the luxury of time, if they can start 12-18 months to get things in order, that is best. It’s like selling your house—you don’t wait until the house is on the market to start cleaning out the garage.”
On the buy side, Rutley said company leaders should “Know what you what to buy, why you want to buy it and how integration will be done. And don’t cheat due diligence—it may be the most mundane part of M&A, but the battle is won or lost on due diligence. You want to know as much about the target as you can.”
Thankfully, early pandemic fears that travel restrictions could hinder integration plans proved not to be a problem. Companies found they still could integrate new acquisitions even in a virtual environment.
So what do corporate leaders need to be aware of in the last quarter of 2021 and the first half of 2022? Will the white-hot M&A market continue to burn?
Anderson said the Biden Administration’s strong antitrust push could be the biggest factor shaping the market in the next few quarters.
“We’re already seeing scrutiny not just of the biggest deals, but also the middle market, run-of-the-mill deals,” he said. “It’s not that the Department of Justice is saying these deals couldn’t close, but it’s just the specter of additional regulation and the time it requires to meet those requirements.”
Rutley, however, noted that deals in the $10-50 million range may fall below the radar of federal antitrust scrutiny.
While antitrust may be an area of increasing concern, Anderson believes the prospects of a massive tax law overhaul “are probably more remote by the day” and such discussions are unlikely to happen in the near future.
The tight talent market also remains an issue, both for in-house counsel and outside corporate attorneys. Some firms are aggressively hiring talent just to keep up with the deluge of current work, an issue American Lawyer examined in a recent article.
“The war for talent is definitely there, and the grass is not always greener on the other side of the hill. But it’s a perfect storm for professional talent,” Anderson said.
“Money is certainly important – you have to be able to pay the mortgage and the bills. But it becomes more important to listen to people about what they want from their career. COVID has exposed the flexibility in the market and if we, as employers, are willing to provide that in the form of flex time, off hours, working from home etc., I think that’s what the up-and-coming generation of leaders is looking for. We’re not in a one-size-fits-all environment anymore.”
In general, Rutley expects the M&A market to remain hot for the near future. Even if the pace slows somewhat, the market for the rest of 2021 and early 2022 looks to be plenty busy.
“The Ouija board says forget retirement—there’s too much work on the table!” he joked.