Third Quarter Deals Break All Records in Biggest M&A Boom

A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in New York City, on July 19, 2021. Andrew Kelly/Reuters

Global mergers and acquisitions reached record highs this year with an outstanding third-quarter performance, shattering previous highs, before and after the financial crisis.

M&A deals worth $4.33 trillion have been made to-date in 2021, breaking the previous high $4.1 trillion hit in 2007. The third quarter saw deals worth $1.52 trillion. Based on Refinitiv data, this is the largest volume done in all recorded quarters. There is an increase of almost 38 percent when compared with last year.

In the United States, third-quarter volume clocked in at $581 billion, up by 32 percent compared to pandemic-ridden 2020; Asia-Pacific showed impressive gains of 21 percent with deals worth $365 billion; and Europe with $473 billion.

The United States accounted for approximately half of the global M&A deals in the first three quarters of the year with $1.95 trillion.

All sectors benefited from the M&A boom, with technology deals especially in software more than tripling in the first nine months of 2021, according to a Reuters report.

Investors have been upbeat with the new deals happening in the market after the 2020 pandemic. Federal Reserve’s bond-buying has resulted in low interest rates and cheap debt financing. This has been beneficial to acquirers, especially within private equity (PE).

“The rationale is pretty straightforward—we’re really awash in liquidity,” said Mark Shafir, global co-head of M&A at Citigroup, from the Reuters report.

Combined with blank check companies, PE made up 32 percent of all global M&A deals. PE buyouts have reached $818 billion as of now, in 2021. This is 133 percent more than compared to last year.

Some bidding wars are happening in Europe, with a prominent public one being the battle to take private the 122-year-old leading grocery in the UK, Wm Morrison. Part of the FTSE 100, Morrison operates 494 stores and employs around 110,000 employees. The bidders include Clayton, Dubilier and Rice and the Fortress Investment Group.

“We’ve never seen so many take privates in Europe, with over half of the 20 that have taken place coming in the UK. The share prices of many of these companies didn’t recover quickly in the months after the pandemic and that is where private equity saw opportunities,” Dirk Albersmeier, global co-head of M&A at JPMorgan Chase, said to FT.

Investment banks to date, in 2021, have raked in amounts to the tune of $100 billion. The deals have also made quite a bit for boutique advisors and leading Wall Street banks, which combined, have netted $60.6 billion, based on Refinitiv.

One of the biggest M&A deals this year has been the U.S. Bancorp acquisition of MUFG Union Bank. The combined asset size comes to $664 billion, while the sale price was $8 billion, including cash and stock.