© Reuters. PHOTOGRAPHY: Street sign for Wall Street can be seen in the financial district of New York, USA, November 8, 2021. REUTERS / Brendan McDermid
By Niket Nishant
(Reuters) – Global deals will keep their pace fast next year, after a historic year of mergers and acquisitions (M&A) that was largely driven by easy access to cheap financing and a booming stock market.
M&A’s global volume exceeded $ 5 trillion for the first time ever, comfortably surpassing the previous record of $ 4.55 trillion set in 2007, Dealogica data showed. The total value of M&A was $ 5.8 trillion in 2021, up 64% from a year earlier, according to Refinitive.
Enriched with cash and driven by growing market values, large redemption funds, corporations and financiers made 62,193 deals in 2021, up 24% from the previous year, as all-time records fell during each month of the year.
Investment bankers said they expect the deal to go crazy next year, despite upcoming interest rate hikes.
Higher interest rates increase the cost of borrowing, which can slow down the activity of mergers and acquisitions. However, business advisers are still expecting a rush of major mergers in 2022.
The flexible monetary policy of the US Federal Reserve has spurred stock market growth and given company leaders access to cheap financing, which in turn has encouraged them to pursue big goals.
The United States has led the way for M&A, accounting for nearly half of global volume – the value of M&A has nearly doubled to $ 2.5 trillion in 2021, despite a tighter antitrust environment under the Biden administration. Image: Global M&A volume since 2016 (in trillions of dollars), https://graphics.reuters.com/GLOBAL-DEALS/REVIEW/lbpgnjrzzvq/chart.png
For interactive graphics click on this link: https://tmsnrt.rs/3pADSza
The biggest deals this year included AT&T Inc (NYSE 🙂 a $ 43 billion contract to merge its media business with Discovery (NASDAQ 🙂 Inc; acquisition of Medline Industries Inc. of $ 34 billion; Canadian Pacific (NYSE 🙂 Railroad $ 31 billion takeover of Kansas City Southern (NYSE :); and the breakups of America’s corporate greats General Electric (NYSE 🙂 Co. and Johnson & Johnson (NYSE :).
According to a survey among contractors and advisors conducted by Grant Thornton LLP, more than two-thirds of participants believe the workload will grow despite the challenges posed by regulations and the pandemic.
Jobs in the sector such as technology, finance, industry, energy and energy accounted for the bulk of M&A volumes. Redemptions backed by private investment firms have more than doubled this year and crossed the $ 1 trillion mark for the first time in their lives, according to Refinitive.
Despite the slowdown in activity in the second half, deals involving special purpose vehicles further increased the volume of M&A in 2021. SPAC deals accounted for about 10% of global M&A volume and added several billion dollars to the total.
Global M&A volume since 2016 (in trillions of dollars) https://tmsnrt.rs/3ez3juO
Global volume of M&A since 2016 (in trillions of dollars) https://tmsnrt.rs/3pADSza
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