This will impact changing demographics on M&A. leading many organizations to rethink their business strategy and some to transact through acquisitions or divestitures.
The trends will play out in many ways. For example, shifting demographics will likely increase deal flow in the private markets. Particularly as aging baby boomers look to sell and transfer business ownership. From a sector perspective, real estate and seniors’ housing are good examples of areas where we see continued opportunities. Especially in North America, where the population is aging and lifespans are increasing. We expect these sectors will see major growth over the next few years amid market consolidation and new investments aimed at meeting population demand.
With demand for government-funded programs rising quickly. Government payers will find themselves forced to respond with a changing mix of public and private services. A major focus of the changing mix is healthcare. Which is evolving not only because of aging demographics but also because of shifts in the way consumers view and manage their health. Young adults, for example, are focusing more on consumer health and wellness and want to better understand and manage their health through digital channels. This is creating new opportunities for industry convergence as companies in other sectors, such as consumer goods, retail, and technology, move into health and wellness services to boost their position and competitiveness.
Other industries experiencing rapid shifts include the automotive and broader transportation sectors. Which have been busy making deals to tap into trends like car-sharing, autonomous driving, digitization, and urbanization. While companies can try to enter those new markets from the ground up. Acquisitions can be the most practical way of capitalizing on opportunities.
Despite a potential slowdown in economic growth. We expect the abundance of capital accessible to investors to continue to support M&A activity. We are certain that demographics and consumer preferences are likely to have a significant impact on the deals landscape over the next couple of years.
the global pandemic has been driving exponential growth for some consumer brands. Captive audiences, with consumers having more time to shop online. Or the market shift to direct brand acquisition means that some brands have grown. As much in just the last 18 months as was predicted over the next three years. So, has this growth led to an increase in M&A activity?
The simple answer is yes. The high levels of liquidity in private equity funds and the desire from large global players to engage with the consumer mean the volume of consumer deals is significant. However, appetite is focused on a limited number of subsectors, where valuations are at an all-time high. Acquirers are also cautious when considering acquisitions because of expectations around the growth in the consumer market in 2022.