Global M&A deal beats all-time records to top $5 trillion in 2021

• M&A deals in the U.S. nearly doubled to $2.61 trillion

• CEO confidence and cheap financing among key drivers

Global merger and acquisition (M&A) activity broke an all-time record this year after exceeding a deal value of $5 trillion for the first time, fueled mainly by an abundance of capital and sky-high valuations.

M&As worldwide jumped 63% to $5.63 trillion till December 16, according to surpassing the Dealogic data, beating the previous record of $4.42 trillion set before the financial crisis, nearly 15 years ago in 2007.

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“Corporate balance sheets are incredibly healthy, sitting on $2 trillion of cash in the U.S. alone – and access to capital remains widely available at historically low costs,” Chris Roop, co-head of North America M&A at JPMorgan, told Reuters.

Strong market

Data show deals in the U.S. nearly doubled to $2.61 trillion, Europe went up 47% to $1.26 trillion, and the Asia Pacific region jumped 37% to $1.27 trillion in 2021, driven by a boost of confidence among chief execs and affordable financing.

Strong equity markets in 2021 allowed big corporates to raise money from stocks and bonds while also putting up companies’ stock as acquisition currency.

Moreover, with a jump in corporate earnings and a rebound in the economy, CEOs were confident to make deals.

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“Strong equity markets are a key driver of M&A. When stock prices are high, that usually corresponds with a positive economic outlook and high CEO confidence,” Tom Miles, co-head of Americas M&A at Morgan Stanley, told Reuters.

While deal-making in the technology and healthcare spaces led the way, which is typical in most years, private equity deals doubled in volume from last year to a record $985 billion due to greater access to financing, Dealogic said.

Last week, Bloomberg reported that Goldman Sachs is considering increasing bonus pools for investment banking by around 50%, and JPMorgan Chase may reach for a 40% increase due to the boom in deal-making this year.

“Investors are deploying cash at an unprecedented pace, which means that, on a global basis, asset valuations have peaked to historic levels,” Luigi de Vecchi, chairman of Europe, Middle East, and Africa banking capital markets advisory at Citigroup, told the news outlet.

“The question is whether the prices being paid now will continue to make sense over time,” he added.

Picture Credit: Financial Management Magazine