In the first half of 2020 the M&A community expected a wave of insolvencies, with distressed restructuring advisers preparing for an extremely busy year, neither of which materialised. In fact, 2021 was the biggest year on record for M&A with $5 trillion worth of deals done globally1. Ultimately, the varying degrees of government support worked. A combination of furlough schemes, quantitative easing, continuation of almost zero (and in some places negative) interest rates and historically high levels of dry powder in the PE community meant listed equities reached new highs, private deals enjoyed record multiples and there was a very quick rebound in employment figures. However, the stimulus had to come to an end, and with it a much anticipated correction.
In the last quarter of 2021 furlough schemes tapered or ended. As jurisdictions in the western world face record high inflation, led by the US, the markets expect an end to quantitative easing and rise in interest rates simultaneously. The impact of the tapering is starting to being seen by way of insolvencies and now in equity markets. In the UK, the number of registered company insolvencies in December 2021 was 1,486, 20% higher than the number registered in the same month in the previous year, and 33% higher than the number registered two years previously. In addition there were 1,365 Creditors’ Voluntary Liquidations, which is 37% higher than in December 2020, and 73% higher than in December 20192.
The M&A and Tax insurance market remains well placed to provide solutions to wrap around a significant variation of deal dynamics, beyond the traditional disposal process. This article sets out further information on how M&A solutions may assist with complex, distressed dynamics.