Niket Nishant

(Reuters) – Global dealmaking is set to maintain its scorching pace next year, after a historic year for merger and acquisition (M&A) activity that was fueled largely by easy availability of cheap financing and booming stock markets.

Global M&A volumes topped $5 trillion for the first time ever, comfortably eclipsing the previous record of $4.55 trillion set in 2007, Dealogic data showed. The overall value of M&A stood at $5.8 trillion in 2021, up 64% from a year earlier, according to Refinitiv.

Large buyout funds and corporates were flooded with cash, encouraged by skyrocketing stock market values. In 2021, they struck 62,193 deals, an increase of 24% over the previous year. All-time records fell during the month.

According to the investment bankers, they anticipate that dealmaking will continue throughout next year, despite rising interest rates.

Higher interest rates increase borrowing costs, which may slow down M&A activity. Deal advisers expect large-scale mergers to continue in 2022.

Stock market rallies were fueled by the U.S. Federal Reserve’s accommodating monetary policies. They also gave executives cheap financing which allowed them to chase large objectives.

The United States led the way for M&A, accounting for nearly half of global volumes – the value of M&A nearly doubled to $2.5 trillion in 2021, despite a tougher antitrust environment under the Biden administration.

For an interactive graphic, click on this link: https://tmsnrt.rs/3pADSza

The largest deals of the year included AT&T Inc (NYSE:)’s $43 billion deal to merge its media businesses with Discovery (NASDAQ:) Inc; the $34 billion leveraged buyout of Medline Industries Inc; Canadian Pacific Railway’s takeover of Kansas City Southern for $31 billion (NYSE:). The breakups and mergers of American corporate giants General Electric (NYSE:) Co and Johnson & Johnson (NYSE:) .

Grant Thornton LLP conducted a survey among dealmakers and advisors and found that more than two-thirds believe that deal volume will increase despite the challenges posed to them by regulations and pandemic.

Deals in sector such as technology, financials, industrials, and energy and power accounted for the bulk of M&A volumes. The number of private-equity firm-backed buyouts increased more than twice this year, reaching $1 trillion for the first ever time according to Refinitiv data.

Despite a slowdown in activity in the second half, dealmaking involving special purpose acquisition companies further boosted M&A volumes in 2021. SPAC deals accounted for about 10% of the global M&A volumes and added several billions of dollars to the overall tally.

Global M&A volumes since 2016 (in trillions of dollars) https://tmsnrt.rs/3ez3juO

Global M&A volumes since 2016 (in trillions of dollars) https://tmsnrt.rs/3pADSza

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