The ripples sent throughout the global economy from the war in Ukraine are far reaching.
European companies that were once eager to tap into a growing Russian market suddenly find it virtually radioactive. U.S., British, and European firms have left Russia in a hurry, lest they face condemnation at home or outright expropriation in Russia itself.
This uncertainty comes with shifting business plans.
After a particularly strong year for mergers and acquisitions in 2021, most experts predicted 2022 would follow a similar trajectory.
Global events, continued supply chain challenges and inflation have muddied the waters though. Before deciding to move forward with a merger or acquisition, companies are forced to undertake an even greater deal of due diligence, particularly as it pertains to ties to Russia, Ukraine, or Russian outputs (of which there are many).
But the United States and its businesses are a bit more immune to such hesitation.
In fact, American startups in the right sectors could find themselves in a particularly advantageous position. Their relative immunity to blowback should better allow their continued development and potentially make them a more appealing target for a merger or acquisition…
Even better, because the timeline for startup exits – be it an IPO or acquisition – is routinely many years into the future… they could be perfectly primed when global M&A activities pick back up again. And, they’ll weather volatility better than any company listed on the stock market.
Of course, the slowing of mergers and acquisitions won’t apply to every sector…
In the latest letter to shareholders, JP Morgan Chase CEO Jamie Dimon wrote, “I would expect to see many mergers among America’s 4,000+ banks – they need to do this, in some cases, to create more economies of scale to be able to compete. Other companies will try different strategies, including bank-fintech mergers or mergers just between fintechs.”
This doesn’t mean that all fintech companies have it made in the shade. In the same way as with any industry, there will be winners and losers.
What it does mean is that investors should pay particularly attention to developments in this industry…
For example, and with its sweeping applications and utility for users, there should be no shortage of banks and bigger fintech companies with interest in an acquisition down the line.
Click here to watch an in-depth conversation with one of the top angel investors in the world and the founders of this fintech startup.
The Research Team