Tech, private equity buyouts and SPACs drive deal-making frenzy

In the wake of pandemic-driven economic disruption, global merger-and-acquisition activity is at an all-time high, according to new data from Refinitiv.

In the first half of 2021, M&A activity totalled US$2.8 trillion, the firm reported.

The deal value was up 131% over the same period last year, and deal volume rose 29%, representing the strongest first half on record for both value and volume.

The record deal making was powered by the second quarter, which saw US$1.6 trillion in deals. This was the fourth straight quarter with over US$1 trillion in M&A activity.

“As the world emerges from the Covid-19 pandemic, we are observing a new era of deal making, which is setting records across industries, regions and deal structures,” said Matt Toole, director of deals intelligence with Refinitiv, in a statement. “Over the course of 40 years of tracking mergers & acquisitions, we’ve never seen deal making at this pace, by value and volume.”

The tech sector led the way in deal activity, generating US$671.6 billion worth of M&A in the first half, which represented almost one-quarter of the total.

The number of deals involving tech companies jumped 52% year over year, and the value of those transactions was triple 2020 levels, Refinitiv said.

The financial sector, and the energy and power sector, each accounted for 11% of the first half deal activity.

The firm reported that private equity–backed buyouts totalled US$533.3 billion in the first half, accounting for 18% of all M&A activity.

The deal value of PE buyouts in the first half was double the same period in 2020, and the number of deals jumped by 76% compared to year ago levels.

Additionally, SPACs (special purpose acquisition companies) accounted for US$387.4 billion in deal activity.

“What’s most interesting is that each of the hallmarks of previous M&A cycles are present today and are evolving, with record levels of tech M&A this year, an all-time record for private equity buyers and a new, closely watched phenomenon that’s helping push volumes ahead, SPACs,” noted Toole.

“As fiscal, monetary and regulatory policies become clearer over the course of the second half of the year, deal making will have to adapt, but conditions seem favorable for the current momentum to continue,” he said.

Among M&A advisors, Goldman Sachs continued to lead the way in the first half rankings, while JP Morgan took second and Morgan Stanley was third.

RBC Capital Markets ranked 11th globally, up from 36th in 2020; TD Securities and BMO Capital Markets also snuck into the top 25, ranking 24th and 25th, respectively.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.