Total global M&A deal value hits unmatched $5.9 trillion

28 February 2022 3 min. read
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The year 2021 brought record-breaking merger & acquisition deal values, with total transaction values reaching an unmatched $5.9 trillion, according to Bain & Company’s latest M&A report.

After a down year in 2020, deal value rebounded to an all-time high last year, with soaring valuations and accommodating deal financing.

“Some buyers were motivated by the plethora of available assets and low cost of capital; others jumped into the fray to stay competitive as their peers did deals. Companies raced to acquire both transformative capabilities and to scale up in a historic land grab,” said David Harding, a partner at Bain & Company.

Strategic buyers led the M&A wave, with strategic deal values hitting $3.8 trillion – the second-highest year for the segment since Bain & Company starting tracking the market back in 2000.

M&A deal market value

Within strategic M&A, some areas notably are booming more than others. Tech assets in particular have decoupled from the broader M&A market, with median enterprise value/EBITDA multiples at 25 times. “This is partially explained by the broad applicability of digital capabilities required to remain competitive across sectors,” said Harding.

Healthcare similarly saw asset prices soar, with median multiples of 20 times. Harding: “In both tech and healthcare, buyers are willing to pay a premium for high-margin, high-growth assets.”

Global strategic M&A deal value

“We remain optimistic about strategic M&A activity this year”, said Dirk Vater, EMEA Head of Financial Services at Bain & Company. “We are on the lookout for risk factors, but do not yet see overarching signals of a slowdown. Nonetheless, it’s important to acknowledge several risk factors that could complicate our positive outlook, such as macroeconomic complications, evolving regulatory scrutiny, and the impact of geopolitical evolutions.”

While corporate-led deals grew by 47% in 2021, deals involving financial investors, special purpose acquisition companies (SPACs) and venture capital firms grew by over 100%.

Global venture capital investment value

The growth of financial buyers has provided strategic buyers with increased competition. “Given their ability to underwrite synergies, strategics have historically had a strong hand against financial buyers. In 2021, nonstrategic buyers continued to grow their share of deal value as financial investors sought to deploy accumulated dry powder,” said Harding.

Further reading: Venture capitalists flocking to technology to start-ups, says Bain.

According to Jad Zerouali, a partner at Bain & Company in the Middle East, the changing landscape means that the “M&A market is different today than what it was 20 years ago. Executives have to keep up with an increasingly diverse map of alternative deal models such as partnerships and corporate venture capital.”

Looking ahead into 2022, the report’s authors suggests the M&A market is likely to remain bullish on the back of solid deal fundamentals. “The environment for deal making remains fundamentally attractive, and a well-balanced mix of market signals suggest the strategic M&A market will continue to be robust,” said Harding.

Note: Bain & Company’s report was developed and released prior to the outbreak of the Russia-Ukraine war.