The global market in mergers and acquisitions (M&A) was extremely strong in 2020 and 2021. However, it may be headed for a correction in 2022, or even a recession. As a result, investors and new business owners in this market should expect to change their strategies during the next two years. Bournemouth-based Joseph Ashford, entrepreneur and owner of K4 Global, offers additional advice on how to prepare for a market correction or recession in the near future.
Background
The global M&A market experienced a positive performance over the entire year of 2021, marking the first time it has done so since 2016. This news comes from Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM), which analyses completed deals throughout the world. M&A deals in 2021 outperformed the World Index1 by an average of 1.4 percentage points based on share price performance.
The QDPM report also shows that the number of completed deals valued at $100 million or more reached a new high of 1,047 in 2021, well over the previous year’s figure of 674. Acquirers in the UK recorded a positive performance of 5.7 percentage points in 2021 and have consistently outperformed the FTSE All-Share index for the last five years.
Ashford’s business activities in 2021 were also successful, which focused on his work with K4 Global. This media consulting firm is based in Ashford’s hometown of Bournemouth, where it provides a variety of business services throughout the world. Ashford oversees his firm’s strategic marketing initiatives in addition to event management and PR services. Other services offered by K4 Global include asset protection, crisis management and security.
Looming Recession
The world economy was strong at the beginning of 2022, largely due to rollouts of COVID vaccines for COVID-19 and the reopening of businesses. The accompanying wave of spending unleashed extraordinary growth last year, but that boost has since faded. New factors are now hampering global economic growth, including the Russian invasion of Ukraine that has increased the cost of essential goods like food and gasoline. Lockdowns in China due to new COVID variants have also disrupted supply chains, especially in the manufacturing sector.
Most countries will have a hard time avoiding an economic downturn due to the combined effects of these factors. The World Bank predicted in January that the global economic growth in 2022 would be 4.1 per cent but lowered that estimate to 2.9 per cent in June. Stagflation, an economic term that refers to periods of weak economic growth and high inflation, is one of the biggest risks to economic recovery. It could erase much of the economic gains from the past two years, especially if it becomes a global trend.
Joseph Ashford believes the M&A market is headed towards a recession, as there are many businesses that require a correction in prices. However, he also thinks many industries are recession-proof because they have businesses that can still do well under the coming economic conditions. Ashford is a big advocate of the travel sector during a recession because it was highly suppressed during the pandemic. Now that travel restrictions are being lifted, this sector is poised to take off despite the overall weaker economy. For example, Ashford thinks that British Airways can only go up at this time.
Preparation
Joseph Ashford has many ideas for ways that entrepreneurs can prepare for a recession in 2022. For example, he believes that content is the future of marketing, rather than advertising. He says, “companies and businesses have to deliver information to the customers and educate them about why your services and products are the best.”
His philosophy of kindness and respect is another strategy that has helped Ashford succeed during difficult periods. He has always practiced this philosophy and brought it to K4 Global in Bournemouth by only hiring people who share these beliefs. Ashford believes his company’s culture has been key to its success.
Networking is also crucial for finding new business opportunities in a recession. This often includes business owners within your own industry, but it can also include social circles. Ashford recommends cultivating friendships with a wide variety of people because you never know when one of your contacts can help you advance your business.
Communication is another habit that Ashford relies on as an entrepreneur. He learned early in his career to continually communicate with customers and employees to learn the strengths and weaknesses of a business. As Joseph Ashford says, “If there are areas that can be improved, good communication will help your business to grow.”
