This week, The Texas Lawbook published new Corporate Deal Tracker data showing M&A lawyers were busier during the first six months of 2022 than they have ever been. The article quoted several of the state’s leading dealmakers on the trends they saw during H1 2022.
Now, we asked those same M&A lawyers to look into their crystal balls for the second half of the year?
The bottom line: Opinions differed. Here is what they said:
Larry Hall, a partner with Baker Botts in Dallas: “I expect upstream acquisition and divestiture activity to remain strong for the remainder of the year.”
Katten partner Peter Bogdanow in Dallas: “I have to believe that it will slow up soon given all the market uncertainty, but I think for now everyone is trying to squeeze their deal in before further problems come up; so for the short term it may in fact be busier. Whether this happens in H2 or next year hard to say.”
Bobby Cardone, a partner with Shearman & Sterling in Dallas: “I think many strategics and private equity funds will continue to have enough cash that deal activity will remain steady through the end of 2022 — despite the war in Ukraine, elevated inflation and other macro headwinds.”
O’Melveny partner Chrissy Metcalf: “My sole prediction for M&A in the coming months is that the changing market will make M&A activity predictably unpredictable. We will all need to continue to adapt to whatever comes our way next.“
Jon Finger, a partner at McGuireWoods in Dallas: “I expect the remaining half of 2022 to be similar to H1. Rising interest rates, inflation and supply chain issues are causing problems for some companies and also slowing the pace for some buyers. This has resulted in some level of disconnect between seller expectations and buyer valuations (it seems most deals have earn-outs these days). But all in all, a strong M&A environment in the lower-middle and middle markets.”
Locke Lord partner Jennie Simmons in Houston: “Recently we have seen an upward tick in the number of transactions coming down the pipeline. And though we are cautious due to the volatility of the market, including the rise of interest rates and threat of potential recession, we are carefully optimistic and expect the third and fourth quarters to remain strong in terms of deal flow and activity.”
Sidley partner Katy Lukaszewski in Houston: “We would expect M&A activity for the rest of the year to remain relatively steady, absent a big movement in inflation or oil and gas prices – i.e., assuming they remain relatively flat.”
Benji Barron, a partner at Vinson & Elkins in Houston: “I’d predict there will be further uncertainty with inflation and the conflict in (Ukraine and) Russia. Unless there are some positive signs for slowing inflation, I’d expect to see more consolidation but generally lower deal flow compared to the first half of this year.”
Sarah McLean, a Shearman partner based in Austin: “Continuation of the same.”
And finally, from Skadden’s Eric Otness in Houston: “Modestly strong. Not to the level of 2021, deals may be taking longer to close and there is also potential for more hostile activity and continued activism.”