healthcare industry

In Focus: Most Common Industries with Mergers and Acquisitions

Mergers and acquisitions (M&A) provide businesses with opportunities to diversify into complementary product lines, expand their customer base, and achieve growth. Given that M&A activity across multiple industries has been adversely impacted by the pandemic, it takes a skilled mergers and acquisitions attorney to help you explore deal-making opportunities. Let’s take a look at the industries where mergers and acquisitions are common.

Where the Mergers Are

Despite the unprecedented market conditions, M&A activity will continue to shape the healthcare, technology, financial services, and retail sectors. In these fiercely competitive industries, smaller companies are at a disadvantage in terms of access to both capital and markets and are likely to be acquired by larger companies that dominate these sectors. 

Despite market conditions, mergers and acquisitions will continue to drive returns in these industries:

  • Healthcare — The healthcare industry is rapidly changing, driven in part by government legislation that presents challenges to small and mid-sized businesses. While the intended purpose of the Affordable Care Act is to expand healthcare access and rein in costs, healthcare costs continue to rise. Smaller companies unable to compete in this environment are likely to be acquired by larger, better-capitalized companies. 
  • Technology — The technology sector is constantly evolving at a pace that requires a massive presence and substantial working capital to compete. While industry giants such as Google, Facebook, and Microsoft have the resources to perfect a new idea or product and bring it to the market, smaller companies, unable to compete, may resort to being absorbed by the dominant industry players.
  • Financial Services — Mergers in financial services have abated somewhat since the 2008 financial crisis in which many firms were acquired by competitors, at times with the government assisting the process. Given the ongoing economic turmoil brought on by the pandemic and the massive intervention by central banks in the financial system, this sector is poised for further consolidation and increased M&A activity.
  • Retail — The retail sector is highly cyclical and the current economic conditions have forced thousands of businesses to close. Larger retailers with good cash flow may be positioned to acquire smaller outlets, however, big box stores are not immune to cash flow shortages when consumer demand declines. As technology and online shopping advance, mergers and acquisitions will continue to be a factor in this sector.

The Takeaway

Despite the unprecedented market conditions, mergers and acquisitions provide businesses with opportunities to preserve value and achieve growth. By working with an experienced M&A attorney, you can capitalize on M&A opportunities and achieve your objectives.