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Global M&A activity hits new record of $5 trillion in 2021

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Hundreds of jobs have been saved after a raft of companies were sold out of administration.
Hundreds of jobs have been saved after a raft of companies were sold out of administration.

Global merger and acquisition (M&A) activity records of all time have been smashed this year, after exceeding $5 trillion for the first time.

Global M&A jumped 63 per cent to $5.63tn (£4.26tn) while in Europe activity was almost 50 per cent up, to $1.26tn (£954m), driven in part by a boost of confidence among chief execs and affordable financing.

The figures, following a surge of dealmaking in 2021, breaks the previous record of $4.42tn set nearly 15 years ago in 2007, according to Dealogic data.

“Corporate balance sheets are incredibly healthy, sitting on $2 trillion of cash in the US 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.

Private equity deals doubled in volume, compared to last year, to a record $985bn (£745bn) as a result of greater access to financing.

The frenzy of dealmaking activity was buoyed by the technology and healthcare sectors, which accounted for the biggest share of the M&A market in 2021, following pent-up demand after M&A activity fell in the immediate aftermath of the Covid-19 pandemic in 2020.

The news follows reports last week that JPMorgan Chase & Co and Goldman Sachs are considering rewarding investment bankers by increasing bonus pools by as much as 50 per cent, as a result of the boom in deal-making this year.

Last month compensation firm Johnson Associates forecast that bonuses for bankers on Wall Street would this year be the highest seen since 2009 following the record levels of deal-making activities as economies reopened and optimism returned for a time in 2021. 

The high demand is likely to continue well into the new year too, with one survey published earlier this month indicating that 90 per cent of dealmakers expect stronger activity over the next 12 months. 

Much of this demand is expected to be driven by distressed deals and cheap UK companies, as analysis from Schroders indicates that, on average, UK companies are undervalued by around 30 per cent. 

The UK’s space sector is also bound for an explosion in M&A next year – with London well-placed for a leading role in the forecasted frenzy.