Global mergers and acquisitions for 2021 have jumped to their highest level since records began more than four decades ago, thanks in part to a booming market and widespread stimulus measures.
More than $ 5.8 trillion worth of deals have been agreed worldwide this year, according to Refinitiva, up 64 percent from last year and the fastest growth rate since the mid-1990s. The value of jobs was 54 percent higher than in 2019 before the pandemic.
He marks 2021 as an extremely stressful year, even for an industry that has been accelerating for most of the past decade.
“In 2021, the stars aligned and almost anything could go right [dealmaking] it is, ”said Frank Aquila, M&A manager at Sullivan & Cromwell.
The boom in mergers and acquisitions has also contributed to record fees for investment banks in 2021. They totaled $ 157 billion, including $ 47 billion in merger and takeover advice fees, the most since records began more than two decades ago.
Central bank crisis interventions to cut interest rates, combined with widespread state aid to pandemic-affected companies, boosted stock markets, boosted growth and provided easy access to cheap business debt.
“One way we look at it is that we’ve flooded the world with money, markets have grown by about that amount, and M&A is on the same rise,” said Andre Kelleners, M&A head of Europe at Goldman Sachs.
The biggest deals this year are included Merge WarnerMedia with competing Discovery create a combined company with a company value of about $ 132 billion and the Canadian Pacific Railways A $ 31 billion purchase rival Kansas City Southern.
“There’s a massive reorganization of the company going on there,” said Alison Harding-Jones, M&A head of Europe, the Middle East and Africa at Citigroup. Companies are “taking advantage of an environment of interest rates and relatively high stock prices” and trying to “position themselves for growth,” she said.
Private equity groups and special purpose vehicles, known as Spacs, have boosted. Group purchase, including KKR’s offer of 33 billion euros for Telecom Italia, 2021 was worth more than twice as much as the previous year.
“I don’t think private capital can take over Apple tomorrow, but I think other than that, they can run almost any company,” said Alvaro Membrillera, a partner at law firm Paul, Weiss in London who advises buyout groups.
A total of 334 Spac deals have been announced – in which the company was created to list and merge with private business and be listed – for companies worth a total of $ 597 billion, or 10 percent of global deals in value. These include a planned merger of former US President Donald Trump’s social media launch with Digital World Acquisition Corp., whose regulators are now exploring.
However, after a frantic start, activity in the Spač market slowed down at the end of the year.
“Raising Spac’s capital and merging Spac were exaggerated in the first quarter of this year,” said Anu Aiyengar, global co-leader of M&A at JPMorgan. Vehicles “should be some percentage of the market, but a much smaller percentage than what we saw this year”.
The boom in business deals has put the industry at the forefront of US competition regulators. Lina Khan, who was appointed chairman of the Federal Trade Commission this year, expressed concern over excessive economic activity concentrated in the hands of several corporate giants.
She was too working closer with EU Competition Commissioner Margrethe Vestager, which could lead to the blocking of several deals according to one top lawyer.