The M&A market set a new record in 2021

According to the KPMG’s report, 2021 was a record-breaking year for the global M&A market with double-digit growth (+47% by value and +31% by volume on the previous year). A new alltime high of 48,948 deals were completed for USD4,418 billion, surpassing the previous records of 2007 in terms of value (USD3,833 billion) and 2017 in terms of volume (37,437 deals). Despite the ongoing disruption caused by the protraction of the Covid-19 pandemic, the following factors have contributed to improving the international climate for M&A transactions: strong economic growth; companies’ renewed confidence with many of them engaged in transformational acquisitions, speeding up their expansion; low inflation rates and continued modest interest rates; high share prices, especially in the US, and large capital reserves which drove intense investment activities by financial sponsors and Private Equity and Venture Capital funds.

The M&A market bounced back in the first half of 2021 due to the recovery of the world economy after the introduction of quarantine restrictions. The number of deals jumped from 19,582 completed transactions in the second half of 2020 to 25,098 in the first six months of 2021 (+28%, +42% compared to the same period of the previous year). Thanks to robust M&A activities in the second half of the year as well (+22% compared to the corresponding period of 2020), at year end, the global market had set a new record of 48,948 completed deals, an increase of 31% compared to the previous all-time high of 2017 (over 37,400 transactions). M&A activities grew in all geographical areas and especially in the Americas (+60% by value after -12% in 2020, and +25% by volume), where they reached a new historic high of USD2,412 billion with 17,579 completed transactions (M&A completed, target). This geographical area confirmed its leading role in the global M&A market, contributing 55% and 36% to the value and volume of global deals, respectively (50% and 38% in 2002, respectively).

European markets returned to second place in the global M&A ranking by volume transactions up to USD1,013 billion (+57% on the previous year and equal to 23% of the global total) and setting a new record of 15,537 transactions (+38%, 32% of the total). All major European countries saw double-digit growth starting with France (+65% by volume and almost triple by value) and the UK (+55% and +77%, respectively), followed by Spain (+49% and +98%), Italy (+38% and more than doubled values) and Germany (+32% and +45%). After the records achieved in 2021, 2022 has started very positively for the M&A market. However, the intention of matching the performance of the previous year may be affected by the tremendous challenges that market players face. Given that the shocks to the financial and commodities markets seen in the first month of the war may persist throughout the year, the growth forecasts for the main economies have been revised downward. KPMG’s analysts do not foresee the repercussions of the war and the strong accelerations in price levels on the global M&A market. But they note, certain trends and factors had already influenced the decisions taken by dealmakers in 2021 and these are expected to be confirmed in 2022.