Trend: Digital Transformation, Forced by COVID-19 in 2020, Shows No Signs of Slowing

Nearly all pundits agree: Demand for digital transformation capabilities will keep fueling 2022 M&A. In 2020, organizations began their adoption of modern technologies that support remote work more quickly than anticipated, due to the pandemic. (For context, as one cloud vendor told Channel Futures, the customer of 2030 arrived early.)

And then the Great Resignation started. Companies were forced to offer work-from-anywhere options to attract and retain people. A swath of employees figured out during COVID-19 lockdowns that they enjoyed not commuting, and getting more time with their loved ones. Last year they left jobs that do not support remote work and are only interested in employers that do. In 2022, dealmakers will pursue M&A that buoys digital transformation efforts.

“Our M&A data reveal that 293 large and mega deals (those valued at over $1 billion) were completed in 2021, the highest number recorded as companies shaped their post-COVID-19 future through transformative acquisitions,” wrote Willis Towers Watson advisers. “This may well be surpassed in 2022 as companies and investors flush with cash continue to look for acquisitions in areas where they need to grow or add capabilities.”

Observers at PwC agree.

“Some re-evaluations of business models and deal strategies are being driven by shifting customer demands as a result of the COVID-19 pandemic, while other companies aim to improve resilience amid such threats as cyber attacks and supply chain disruption,” they say. “Transformation increasingly involves reassessing digital capabilities, and the share of technology acquisitions by non-tech buyers is growing.”

Meanwhile, KPMG analysts say the ongoing pandemic remains a big contributor to 2022 M&A.

“We expect the need for digital and business transformation to continue to be an important driver of deals across all sectors,” they say.