The first six months of 2021 saw continued appetite for global Merger and acquisitions (M&A) dealmaking with deals worth more than US$2.6t, up from US$926b year-on-year and surging past the pre-pandemic five-year average (H1 2015-2019) of US$1.6t, according to new analysis by EY.
More than half of the activity was recorded in North America, which saw M&A values of US$1.4t (up from US$345b in H1 2020)-almost double the average seen in the five years prior to the Covid-19 (US$784b).
North America was followed by the Asia-Pacific region, which saw deals worth US$446b, a jump from US$222b in H1 2020 and an increase from an average of US$317b in H1 2015-2019. Europe follows, recording US$412b, up from US$245b in H1 2020 and exceeding the H1 2015-2019 average of US$356b.
Despite a fall in the total number of deals announced, a spike in billion-dollar deals is the key driver behind activity so far this year according to the analysis, with 479 such deals announced. Despite many parts of the world economy still operating under restrictions, cross-border deals have also staged an impressive comeback, increasing to US$688b from US$236b in H1 2020 and above the average of US$480 recorded in the five years prior to the COVID-19.
Andrea Guerzoni, EY Global Vice Chair – Strategy and Transactions, said:
“Dealmakers will always be on the lookout for innovative funding solutions, and SPACs started the year as the main show in town, particularly in ecommerce and electric vehicles deals. After recording peak numbers in the early months of 2021, SPAC activity has slowed recently, but the M&A momentum has continued pointing to a fundamentally strong market moving forward. The recent increase in larger PE deals and examples of collaboration within PE firms point to deals getting off the ground with an open mind when it comes to financing solutions.”
Optimism drives activity in North America and Europe
The US tops the list of countries with the highest outbound transactions value, having recorded US$221b in deals, up from US$77b in H1 2020 and more than double the average seen between H1 2015-19 (US$92b). Recording US$58b (up from US$14b in H1 2020), Canada comes in second, while The Netherlands and Ireland emerge as outbound M&A front-runners with US$53b from an average of US$21b between H1 2015-19 and US$51b from an average of US$4.3b respectively.
Meanwhile, domestic dealmaking in China is running at record pace with M&A value so far this year totaling US$197b – eight times more than foreign-invested M&A deals and a 20% increase on the average domestic transactions value of the five pre-pandemic years (US$164b).
While technology-related transactions are leading the way with an increase in value of more than 161% (to US$783b) compared with the pre-pandemic average, the media and entertainment sector has seen some of the largest deals in 2021 – as streaming giants look to attract and retain customers. The sector has already recorded an impressive US$157b worth of deals (up from US$16b in H1 2020) and more than double the average of the five pre-pandemic years (US$300b).
Meanwhile, the value of these environmental, social and governance (ESG) -related transactions has jumped from US$35.7b in H1 2020 to US$96.5b in H1 2021.