Global M&A volume topped $ 5,000 billion for the first time, largely eclipsing the previous record of $ 4.5 trillion set in 2007, according to Dealogic data. The aggregate value of mergers and acquisitions rose to $ 5.8 trillion in 2021, up 64% from the previous year, according to Refinitiv.
Full of cash and encouraged by soaring stock market valuations, large buyout funds, corporations and financiers closed 62,193 deals in 2021, up 24% from the previous year, as record highs historical records have fallen every month of the year.
Investment bankers have said they expect the trading frenzy to continue next year, despite looming interest rate hikes.
Rising interest rates increase borrowing costs, which can slow M&A activity. However, transaction advisers still expect a wave of big mergers in 2022.
The accommodative monetary policies of the US Federal Reserve fueled a stock rally and provided business executives with access to cheap financing, which emboldened them to tackle big targets.
The United States has led the way in mergers and acquisitions, accounting for almost half of global volumes – the value of mergers and acquisitions nearly doubled to $ 2.5 trillion in 2021, despite a tighter antitrust environment under the Biden administration.
Among the biggest deals of the year were AT&T Inc’s $ 43 billion deal to merge its media operations with Discovery Inc; the leveraged buyout of Medline Industries Inc for $ 34 billion; the purchase of Kansas City Southern by the Canadian Pacific Railway for 31 billion dollars; and the dissolution of the American behemoths General Electric Co and Johnson & Johnson.
According to a survey conducted by Grant Thornton LLP of negotiators and advisers, more than two-thirds of participants believe the volume of transactions will increase despite challenges posed by regulations and the pandemic.
Transactions in sectors such as technology, finance, industry, energy and power accounted for the bulk of M&A volumes. According to data from Refinitiv, buyouts backed by private equity firms have more than doubled this year to cross the $ 1 trillion mark for the first time.
Despite a slowdown in activity in the second half of the year, transactions involving special purpose acquisition companies further boosted M&A volumes in 2021. PSPC transactions accounted for around 10% of global M&A volumes and added several billion dollars to the overall tally.