Needs of Strategics, PE Firms and SPACs Led to Record US M&A Levels, Likely To Sustain Dealmaking in 2022
M&A dealmaking set new records in 2021, driven by strategics, PE firms and SPACs. Corporate needs and significant capital available to be deployed are likely to sustain high merger activity into 2022.
Choppy Market for SPACs and PIPEs, Competition for Targets Spurs Deal Innovations
SPACs are weighing creative capital-raising and deal structures as shareholder redemptions increase, PIPE financing has become more challenging and competition for targets has increased. Meanwhile, regulatory oversight will likely intensify.
Will Europe’s M&A Boom Survive Stricter Regulation, Shareholder Resistance and COVID?
European M&A deal volume set new records in 2021, after a boom in the second half of 2020. But tougher stances by regulators, more demanding shareholders and higher interest rates could put the brakes on.
SPACs Considering German Targets Face Unique Challenges
Looking to expand the universe of potential targets in the face of increasingly competitive de-SPAC processes, some U.S. SPACs are pursuing German targets. But successful deals require careful due diligence, complex deal structures, and thorough tax, accounting and governance planning.
Activism Landscape Continues To Evolve
Some activists will pursue takeovers, underperforming de-SPACed companies will be vulnerable and ESG issues will remain central in many campaigns. Changes to index fund policies and voting procedures could make outcomes less predictable.
Institutional Investors, Activists and Legal Reforms Begin Altering Japanese Corporate Governance
Japanese management traditional resistance to shareholder pressure is slowly breaking down as even passive institutional investors demand accountability and shareholder activists succeed in electing outside directors.
Private Equity and Sovereign Wealth Interests Converge in US Real Estate
As sovereign wealth and foreign pension funds have grown in size and sophistication, and focused more on alternative investments, their interests and the interests of PE firms are increasingly converging in the U.S. real estate space.
Strong IPO Demand Offered One Route to Public Markets; Other Companies Opted for De-SPACs or Direct Listings
Traditional IPOs, SPACs and direct listings had record years in 2021. IPO companies are attracting retail investors through trading apps, opening up their roadshows to the broader public and negotiating more flexible lockups.
Wide-Ranging Reforms of UK Capital Markets: A Watershed Moment?
Reforms of London’s listing rules could begin bearing fruit in 2022, as restrictions on SPACs, rules on listing companies with dual-class share structures and free float requirements loosen.
Hong Kong Encourages Listings by Foreign Companies, SPACs
To remain competitive, the Hong Kong Stock Exchange is liberalizing rules on secondary and dual primary listings. It will also allow SPACs to raise capital, although subject to significant restrictions.
Environmental, Social and Governance Issues
Investors Press for Progress on ESG Matters, and SEC Prepares To Join the Fray
As the SEC prepares to propose new disclosure requirements about ESG matters, investors and proxy advisors are pressing companies for enhanced disclosure and evidence of progress on issues from workforce diversity to carbon emissions.
UK, US and Some Asian Jurisdictions Join in Pressing Companies To Diversify Their Boards
U.K.-listed companies will likely be required, starting in 2022, to disclose whether their boards meet gender and ethnic diversity targets and, if not, explain why. The new rules parallel those adopted recently in other major financial markets.
ESG Disclosure Requirements Put New Spotlight on Private Capital Managers
New EU ESG rules require many private capital fund managers, including those outside the EU that access EU investors, to make public disclosures on investment processes and policies that have historically been kept confidential.
Increased Demand for Renewable Energy PPAs Expected To Create Seller-Friendly Market
As more companies adopt sustainability policies, strong demand for renewable energy is giving producers more leverage in negotiating power purchase agreements.
Expansive Stimulus and Monetary Policy Helped Limit Restructurings, but Debt Maturities Loom
Despite the devastating impact of COVID-19, default and bankruptcy rates remain low. Whether this will continue or not depends on inflation, government policy and the capital markets.
Recent Delaware Bankruptcy Rulings Address Whether a Plan of Reorganization Can Deny a ‘Make-Whole’ Payment Without Impairing Lenders’ Claims
Recent bankruptcy cases ruled with differing results on whether lenders’ claims were unimpaired by debtors’ reorganization plans that denied payment of allegedly due make-wholes.
Treatment of Midstream Agreements in Bankruptcy Remains Unsettled, but Limited Consensus May Be Emerging
Exclusivity clauses in midstream oil and gas gathering contracts typically are framed as covenants that run with the land to protect pipeline companies if producers seek to reject them in bankruptcy. But courts remain divided on whether these provisions actually preclude rejection.
Unhappy Lenders Challenge Aggressive Debt Exchanges
Borrowers using “open market purchases” or “Dutch auctions” to exchange loans without offering the same terms to all lenders are facing court challenges. The rulings may shape future restructurings and lead to changes in standard loan terms.
NFTs Give Rise to Innovative New Business Models and Revenue Opportunities
NFTs’ surge in popularity of has led to a wave of innovation and new opportunities for brands, rights owners and creators, but also raises novel and important legal issues that stakeholders need to consider.