Mergers move record US$5.8 trillion in 2021

The mergers and acquisitions market is expected to maintain a bubbling pace next year, after a historic 2021, due in large part to the availability of cheap money and buoyant stock markets.

The volume involved in buying and selling equity stakes in 2021 reached $5.8 trillion in 2021, an increase of 64% from the previous year, and above the previous record of $4.55 trillion in 2007, they showed Dealogic’s data.

Large private equity funds, companies and financiers closed 62,193 deals in 2021, up 24% year-on-year.

Investment bankers said they expect the trading frenzy to continue well into next year despite rising interest rates.

Higher interest rates increase borrowing costs, which can slow down activity. But business advisers still expect a flurry of big mergers in 2022.

The United States led the market, accounting for nearly half of global volumes — the value of mergers and acquisitions nearly doubled to $2.5 trillion in 2021 despite a tougher antitrust environment under the Biden administration.

The year’s biggest deals included AT&T’s $43 billion deal to merge its media businesses with Discovery; the $34 billion leveraged buyout of Medline Industries; the $31 billion acquisition of Kansas City Southern by the Canadian Pacific Railway; and the spin-offs of giants General Electric and Johnson & Johnson.

According to a survey by Grant Thornton, turnover is expected to grow despite the challenges posed by regulations and the pandemic.

Businesses in sectors such as technology, finance, industrial and energy accounted for the majority of merger volumes.

Acquisitions backed by private equity firms have more than doubled this year, surpassing the $1 trillion mark for the first time, according to Refinitiv.

Despite a slowdown in activity in the second half, trading involving special purpose acquisition companies further boosted merger volumes in 2021. SPAC deals represented around 10% of global volumes.