Global M&A volumes surge past $5tn in 2021; Highest level on record

By Amirtha P S, Desk Reporter
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Merger & Acquisition
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The global dealmaking is anticipated to continue its growth next year, after a momentous year for merger and acquisition (M&A) activity which was powered largely by the easy availability of cheap financing and thriving stock markets.

According to UK-based financial markets platform Dealogic, the global M&A volumes topped $5 trillion for the first time ever, comfortably eclipsing the previous record of $4.55 trillion set in 2007. The data from Refinitiv shows that the overall value of M&A stood at $5.8 trillion in 2021, up 64 percent from a year earlier.

With the abundance of cash encouraged by soaring stock market valuations, large buyout funds, corporates and financiers struck 62,193 deals in 2021, up 24 percent from the year-earlier period, as all-time records tumbled during each month of the year.

Investment bankers said they are expecting the dealmaking frenzy to continue well into next year, despite looming interest rate hikes. Higher interest rates increase borrowing costs, which may slow down M&A activity.

Accommodative monetary policies from the US Federal Reserve fueled a stock market rally and gave company executives access to cheap financing, which in turn emboldened them to go after large targets.

The US led the way for M&A, accounting for nearly half of global volumes, the value of M&A nearly doubled to $2.5 trillion in 2021, despite a tougher antitrust environment.

The largest deals of the year included AT&T Inc’s $43 billion deal to merge its media businesses with Discovery Inc, the $34 billion leveraged buyout of Medline Industries Inc, Canadian Pacific Railway’s $31 billion takeovers of Kansas City Southern, and the breakups of American corporate behemoths General Electric Co and Johnson & Johnson.

According to a survey of dealmakers and advisers by Grant Thornton, more than two-thirds of participants believe deal volumes will expand despite challenges posed by regulations and the COVID-19 pandemic.

According to data from Refinitiv, deals in sectors such as technology, financials, industrials, and energy and power accounted for the bulk of M&A volumes. Buyouts backed by private-equity firms more than doubled this year to cross the $1 trillion mark for the first time.

Despite a slowdown in activity in the second half, dealmaking involving special purpose acquisition companies further boosted M&A volumes in 2021. The special purpose acquisition company (SPAC) deals accounted for about 10 percent of the global M&A volumes and added several billions of dollars to the overall tally.

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