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What 2021 Tells Us About Finance and Private Equity Trends in 2022

March 18, 2022

With 2021 in the metaphorical rearview mirror, it’s time to think about what we learned last year, and the implications for the future.

In this episode of the Deal Us In podcast, host Ann Dorsett sits down with McGuireWoods partner Phyllis Young and associate Kelsey Hitchcock to discuss finance and private equity trends they took note of in 2021.

If there was one word to sum up 2021, it might be frenetic. It certainly kept the team on their toes.

Although it didn’t necessarily look like the busiest year, Phyllis said the debt financing space saw a lot of activity from borrowers and lenders in 2021. Borrowers in particular also benefited from more opportunities in the energy markets. And there were also a lot of acquisitions, necessitating more add-on financing.

Indeed, everyone noticed an increase in deal activity. The fluctuating state of the COVID pandemic played a role in the unpredictability of the year, as companies struggled to respond to ever-changing requirements, while also trying to keep employees on board.

The general consensus is that these staffing challenges will continue into 2022.

“It’s hard to imagine the pendulum on a lot of these issues swinging seamlessly back to where we began in early 2020,” Kelsey says. “We’re starting from a new normal, and that’s an ever-evolving place.”

Listen in to hear more of the team’s top trends, which ones they think will have an impact in 2022, and lessons they believe should be applied this year.

💡 Featured Guests 💡

Name: Phyllis Young

What she does: Phyllis is a partner at McGuireWoods. She’s a transactional lawyer with significant experience in finance, financial restructurings, mergers and acquisitions, and other corporate matters. She routinely handles secured lending transactions, debt restructuring, and complex intercreditor arrangements.

Company: McGuireWoods

Where to find Phyllis: LinkedIn

Name: Kelsey Hitchcock

What she does: Kelsey is an associate at McGuireWoods. She focuses on corporate transactions, representing public and private companies in diverse industries in mergers and acquisitions, divestitures, commercial transactions, and corporate governance matters.

Company: McGuireWoods        

Where to find Kelsey: LinkedIn

🗝️ Key Points 🗝️

Top takeaways from this episode 

Debt financing trends in 2021 — Phyllis found 2021 to be a busy year in terms of debt financing. She also noticed lots of first lien deals with commercial banks, energy markets providing new opportunities to borrowers, and an increase in acquisition activity.

Representations and warranty insurance challenges — A hot deal market in 2021 coupled with labor shortages, rising costs, and an abundance of choice for underwriters made it challenging to negotiate rep and warranty insurance for deals. With many deals only receiving one bid, negotiating costs was nearly impossible. Moving into 2022, the market seems to be correcting, with a return to multiple bids per deal, and stabilizing costs.

Optimizing your work life — After a few years of working from home or hybrid, all three lawyers have advice on optimizing work environments for maximum productivity. Suggestions include creating a dedicated workspace set up with everything you need, taking breaks, and having clearly defined to-do lists.

🔆 Episode Highlights 🔆

[02:22] Energy markets opening up: Phyllis saw energy markets opening up in 2021, providing borrowers with better terms.

[03:39] New challenges in purchase agreements: Kelsey reviews some of the changes she saw when putting together purchase agreements over the course of 2021. Businesses are struggling to achieve financial continuity, and pandemic relief programs have made it harder to reach accurate valuations.

[07:24] The rep and warranty insurance squeeze: Ann describes the challenges she saw getting representation and warranties for deals in 2021, thanks to a busy market, labor shortage, and rising costs.

[10:21] Look out for these 2021 trends in 2022: Kelsey observes that the trends and challenges she saw in 2021 have continued into the new year.

[13:43] Interest in new products: Phyllis predicts that we’ll continue to see a strong interest in new markets, including fintech, ad tech, bitcoin, and environmental, social, and governance (ESG).

[24:53] Working from home efficiently: Phyllis believes that people can be just as efficient working from home as they are working in the office. All three lawyers share how they make it work for them.

🎙️ About Deal Us In 🎙️

✔️ Thank you for joining us at the table for this episode of Deal Us In. We invite you to join the conversation by using our #Dealusinpodcast on Twitter or LinkedIn.

✔️ If you have questions about today’s conversation, please feel free to reach out to Molly White at mwhite@mainstcapital.com or Ariail Barker at ariail@7mileadvisors.com.

✔️ Don’t miss another episode! Subscribe in your preferred podcast app.

✔️ If you have a recommendation for an inspiring interviewee, a question you’d like us to ask, or a topic you would like to hear covered, or if you’d like to tell us about women-focused initiatives in the field, please go to our website. We look forward to hearing from you.

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

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