2022: The Vortex of Volatility

Published: Mar 28, 2022  |  

Managing Director with Alvarez & Marsal

This commentary represents the first of what I hope will be many contributions to New Thinking Magazine, providing readers with insights on deals in the marketplace, industry forecasts and market ups and downs, both in the United States and around the world.

I’m Paul Aversano, and I lead the Global Transaction Advisory Group for Alvarez & Marsal, the largest transaction advisory group outside the Big Four accounting firms, where I spent half my career before joining A&M, including working as a former partner with EY.

While my headquarters is based in New York, I like to get my boots on the ground in all kinds of places to hear what companies, suppliers, vendors and investors are thinking about or worried about. I do business around the globe, so I often spot emerging trends or come back with new insights into this amazingly interconnected global economy that you won’t find in The Wall Street Journal or on Bloomberg TV.

As you can imagine, I’ve been holed up at home for two years like the rest of you, and I’m eager to get busy flying again. And whatever I find, I’ll report it here.

What will you get in return for reading what I have to say? Perhaps some information that may change your plans or your company’s strategic focus. More likely, you’ll simply find some interesting tidbits that can broaden your understanding of markets and industry trends.

Beyond sharing the information I’ll glean from various parts of the world, I will also use this space to offer my take on deal making—the focus of what I’ve been doing for more than 25 years—on both the sell side and buy side of transactions.

To begin, I have a definite point of view on the turbulence we’re seeing in the market this year. If you thought the last two years were rocky, consider this: 2022 has already brought some of the highest inflation experienced in 40 years, interest rates are beginning to rise and supply chain issues are affecting every corner of the economy. Now throw in the U.S. midterm elections, the geopolitical disruption in Ukraine, and uncertainty with Iran, and you’ve got yourself a highly unsettled environment.

I call what’s happening during this turbulent year “the Vortex of Volatility”—so many external factors are coming together at once that even the sharpest leaders will lose a lot of sleep.

By the end of this year, we’ll begin to see which industries are winning and losing. Faced with a challenging capital and public equity market, the leaders who are most adept at managing successful transactions and factoring these disruptions in their valuations—whether they are selling or buying—will be highly valued and rewarded for their decision making and cool heads.

Turbulence is all around us and has been for some time, from the electrification of vehicles transforming the auto industry to violent state aggression that now seems to be changing the world order as we’ve known it. Yet, despite all that, I expect even more dealmaking over the next year, especially in tech and health care.

Last year was a banner year for private equity (PE) transactions, and many firms are still sitting on a lot of cash and looking to spend. A Harvard Law School report shows PE was the driving force to 2021’s transaction boom, breaking global transaction value records. Private equity has grown into a $11 trillion industry, according to the Securities and Exchange Commission. That’s a big force in the marketplace that’s worth following, and you’ll be able to follow it here, from which companies are doing what to the macro trends globally that will affect each region differently.

Hopefully soon, we’ll all get a chance to travel as we used to. And when I do, I’ll be sure to share back here what I’m seeing and how it might affect us all.

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