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M&A deals reached record highs in 2021
Allen & Overy has released its Q4 M&A Insights report for 2021, showing the astronomical rise in value of M&A transactions.
Lauren Croft
Released on Wednesday (12 January), the new analysis shows that the value of global M&A transactions surged to a record high of nearly US$5.4 trillion in 2021, an increase of 65 per cent from last year and 42 per cent higher than 2018, which was previously the highest year on record.
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The number of M&A deals also increased by 21 per cent – and was 16 per cent higher than the number of deals in 2018.
All regions saw growth, with the exception of Greater China, where deal values were relatively flat, although deal volumes did show some growth, according to the firm. The U.S. was the main driver behind the record year, with M&A value up by 91 per cent and accounting for more than 50 per cent of overall global growth.
Furthermore, all sectors saw growth, and David Broadley, A&O’s global co-head of corporate and M&A, said that the technology sector, in particular, drove deal values through the roof in 2021.
“The real powerhouse behind this incredibly resilient market was the technology sector, which saw a 67 per cent increase in deal values year-on-year, exceeding the US$1 trillion mark for the first time with a total value of US$1.05 trillion,” he said.
“Deals within the sector accounted for 20 per cent of all global M&A deals by value and 22 per cent by volume. Meanwhile, software deals accounted for almost half of all the technology sector’s deals by value, seeing an increase of 130 per cent compared to 2020.”
This report follows the firm’s Q3 2021 M&A Insights report: Rethinking priorities as transactions boom, which was released in October last year and included similar observations about technology trends in the M&A market.
According to A&O’s previous report, the technology sector is driving a lot of M&A activity as the world emerges from the pandemic, with the Australian market being no exception.
The Q4 report also notes a significant uplift in megadeals, with transactions worth more than US$5 billion and US$10 billion up by 44 per cent and 23 per cent, respectively. Cross-border activity also continued to recover strongly after the pandemic, recording a 68 per cent increase in value and a 32 per cent lift in volume.
“In an extraordinary year, we have seen transactions at every level of the technology market, from small start-ups being bought for their IP and innovative products through to megadeals, as well-funded, high-growth companies look to expand into new markets, buy into new technologies or look to hire new talent,” Mr Broadley added.
“Evidently, these companies, whose products and services have long been distributed worldwide, are now global in their footprint too. It’s also an indication of a growing confidence that we are experiencing a sustained trend, fuelled by global demand for innovation and digital transformation.”
