2021 M&A Deals Overview and 2022 Outlook

Erik Mills

2 min read

#M&A Update: Dec 27, 2021

Despite all odds, 2021 came down in the history of M&A as record-breaking. Global deal-handlers collectively brought the market worth beyond the $5.5 trillion mark, outperforming the previous record of $4.2 trillion in 2015. And according to experts, 2022 is very likely to continue the strong position of merger and acquisition transactions, both in the US and internationally. 

The summary of M&A deals in 2021

The COVID-19 pandemic visibly slowed down the M&A sector in the first half of 2020. However, the activity picked up by the third quarter, closing the year at just 20% short of 2019’s numbers.

While several major markets, such as hospitality and transportation, struggled, others thrived at unprecedented rates. Healthcare, financial and investment services, energy, and technology companies gained a new level of presence and took this opportunity to explore the M&A deals.

Additionally, as the global economy went into the biggest shock since 2008, the deal-making conditions, including interest rates, became more comfortable. This led investment bankers and CEOs into the ongoing race towards expansion and sustainability.

Here are some numbers that reflect global M&A in 2021:

• The M&A market reached a valuation of over $5.5 trillion across 58,000 transactions.
  
• The highest-ranked investment banks made nearly $28 billion in fees for M&A advisory, with Goldman Sachs, JPMorgan, and Morgan Stanley as the top three.
  
• Investors reevaluated their outlook on M&A as deal announcements have proved to drive the stocks up.

In the US, the M&A scene in 2021 was largely impacted by the rise of Special Purpose Acquisition Companies (SPACs). While the SPAC momentum seemingly slowed down by the fourth quarter, experts say that this merger approach is likely to stay for a while longer, with the founders showcasing more diligence than at the beginning of the trend.

Overall, the 2021 American M&A market benefitted from private equity investors, accommodating regulations brought by the Biden administration, and lower interest rates.

M&A trends for 2022

Judging from the success of 2021, M&A market insiders are confident that 2022 will be at least just as good. Of course, there are a few challenges on the way.

The Coronavirus continues to rage and introduce new variants, which continues the difficulties for many sectors. At the same time, the economy already has the experience of overcoming pandemic-related complications, as shown by the late 2020 and 2021 numbers. 

Growing interest rates and antitrust regulations are going to become another obstacle to smooth M&A in 2022. But while some deal-handlers confirm that it has already become harder to process transactions, most of them still agree that it won’t slow down the recently gained M&A momentum. 

On the bright side, there are a several highly-promising M&A trends that will be on the rise in 2022:

• ESG and digitization mergers and acquisitions will remain the priority across all sectors bringing businesses on the path of more resourceful and sustainable growth.
  
• The investors will continue to motivate grand mergers to stimulate publicity and allow companies to explore new horizons.
  
• Virtual dealmaking is going to evolve and open even more doors to decision-makers across all geographies and markets.

Virtual data rooms and M&A in 2022

Virtual communication gifted M&A experts everywhere with the most valuable asset – time. By eliminating the need to travel and allowing the ability to process due diligence remotely, virtual data rooms established a platform for faster, more equipped decision-making.

While the high-profile meetings will still happen in person, for the most part, a lot of collaborations will remain in the virtual space. Insiders believe that in 2022 most boards will adopt a hybrid model, reserving the physical interactions for a minimal amount of cases.