After a historic year for merger and acquisition M&A activity that was fueled by easy access to cheap financing and booming stock markets, the Reuters global dealmaking is poised to maintain its scorching pace next year.
The previous record of $4.55 trillion set in 2007 was surpassed by global M&A volumes of $5 trillion, according to Dealogic data. The M&A's value was $5.8 trillion in 2021, up 64% from a year ago, according to Refinitiv.
Large buyout funds, large buyout funds and financiers struck 62,193 deals in 2021, up 24% from the year-earlier period, as all-time records fell during each month of the year.
Investment bankers said they are expecting the deal-making 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. Deal advisers still think there will be a flurry of mergers in 2022.
Accommodative monetary policies from the U.S. Federal Reserve fueled a stock market rally and gave company executives access to cheap financing, which in turn encouraged them to go after large targets.
The United States 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 under the Biden administration.
Over two-thirds of the participants believe deal volumes will grow despite the challenges posed by regulations and the pandemic, as well as AT&T Inc's $43 billion deal to merge its media businesses with Discovery Inc., and the $34 billion takeover of Kansas City Southern by Canadian Pacific Railway and the merger of American corporate giants General Electric Co and Johnson Johnson.
The deal in the sector such as technology, financials, industrials and energy and power accounted for the bulk of M&A volumes. Private equity firms have doubled their buyouts this year to cross the $1 trillion mark for the first time in a long time, according to Refinitiv data.
Dealmaking involving special purpose acquisition companies boosted M&A volumes in the second half despite a slowdown in activity in the second half. SPAC deals accounted for approximately 10% of the global M&A volumes and added several billions of dollars to the overall tally.
Since 2016, global M&A volumes have risen in trillions of dollars https: tmsnrt.rs 3 pADSza