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New heights: US M&A H1 2021

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US M&A set a new record for value in H1 2021—and nearly surpassed the full-year figure for 2020

A year of historic highs and rapid change

US M&A surged to record levels in the face of pandemic-related challenges and potentially dramatic regulatory shifts

We are just heading into August, but it is already safe to say that 2021 is a historic year for US M&A. Deal value rose to a new high of US$1.27 trillion in H1 2021. This was a 324 percent increase compared to H1 2020—and was virtually equivalent to the total value recorded in all of 2020.

This torrent of deals was the result of a perfect storm of activity on the part of strategic, PE and SPAC dealmakers. The pandemic drove many corporates to offload non-core divisions and acquire digital capabilities. Corporates that thrived during the pandemic used M&A to consolidate gains. PE firms strove to deploy their massive troves of dry powder. And SPACs searched for opportunities to invest the record levels of funds they raised.

The election of Joe Biden as President significantly reduced political uncertainty that may have dampened activity in 2020 and this spurred dealmaking in 2021. However, the administration's policies could also complicate dealmaking.

The Biden Administration is taking vigorous steps to reshape antitrust policies and practices in the US. In July, the President issued an Executive Order to promote competition and lower prices throughout the economy through increased antitrust enforcement. These efforts are likely to intensify during the run-up to the US midterm elections in November 2022. The effects were already visible in the recent decision by Aon and Willis Towers Watson to call off their merger, which they first announced in March 2020. The deal would have created the world's largest insurance broker, but the Department of Justice opposed the deal on the grounds that it would eliminate competition, reduce innovation and lead to higher prices.

CFIUS has shown that it will mostly continue with the more aggressive approach to evaluating deals for national security concerns that was established by the previous administration. And with the appointment of Gary Gensler as Chair of the Securities and Exchange Commission, the administration signaled it will take a more aggressive approach to securities law enforcement.

There are a number of other looming risks as well. The possibility of rising inflation and the end of government support measures related to the pandemic could shock the market. And dealmakers are concerned about potentially frothy valuations.

But perhaps the greatest variable remains the uncertain trajectory of the pandemic. Though the US was on a course of increasing optimism as vaccines were rolled out, recent concerns about the Delta variant of COVID-19 have raised questions—and exacerbated political divisions—about how quickly economies should open up.

Despite these challenges, the outlook for dealmaking remains very positive. US GDP forecasts are upbeat, stock markets are at historic highs, and interests remain low. Moreover, the Biden Administration's economic stimulus efforts and ambitious plans for energy transition and infrastructure development will inject large sums of capital into the economy. We expect US M&A to remain very active in the second half of 2021.


US M&A hits record highs

The US enjoyed record levels of M&A activity in H1 2021, as dealmakers made up for lost time caused by pandemic-related disruptions

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Private equity deal activity forges ahead

US private equity has rallied following pandemic lockdowns, thanks to adaptations to remote deal processes and record dry powder

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Sector overview: TMT and healthcare continue to dominate

TMT M&A tops the sector charts again

electronic engineering

Oil & gas M&A rebounds after pandemic lows

After a year of volatility, the oil & gas industry has stabilized and M&A activity has resumed


Technology dealmaking goes from strength to strength

Technology M&A activity is thriving in 2021 as dealmakers continue to turn to the sector in search of assets with high-quality earnings and growth prospects

electronic engineering

Healthcare displays strong deal activity post-pandemic

The value of healthcare M&A in H1 surpassed pre-pandemic levels


Consumer and retail M&A picks up speed

Deals in the consumer and retail sector show signs of recovery as consumer spending
rallies post-pandemic

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Power & renewables M&A soars on back of green policies

The power and renewables industry is positioned for a sustained period of strong deal
activity as the US focuses on hitting net zero carbon emissions by 2050

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Real estate sees welcome revival in M&A in 2021

M&A value among real estate firms quadrupled year-on-year in H1, after a tough 2020

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Infrastructure M&A forges ahead, even before government boost

After a pause, investment in infrastructure has ballooned, even before the Biden administration's US$1 trillion-plus plan is passed


In focus

US dealmaking braces for more challenging antitrust environment

After campaigning for the presidency on a platform that included more aggressive antitrust enforcement, Joe Biden has taken early steps to honor those pledges

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CFIUS set to continue careful scrutiny under Biden Administration

President Joe Biden's approach to the national security risks posed by foreignbacked M&A may differ in style from his predecessor, but not in substance


Reverse break-up fees emerge in response to deal terminations

Even as economies pick up, dealmakers have maintained focus on managing the risk of broken deals

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SEC to take tougher line on enforcement

New Securities and Exchange Commission Chair Gary Gensler has put scrutiny of
SPACs and private funds at the top of his agenda


Notable decisions from Delaware courts

In the first half of 2021, Delaware courts issued several decisions affecting M&A dealmaking

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Six trends to look out for in the second half of 2021

After a turbulent 18 months which saw M&A crash before an impressive return to form, H2 2021 is set for continued strong deal activity, as well as new challenges

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deep tech

Private equity deal activity forges ahead

US private equity has rallied following pandemic lockdowns, thanks to adaptations to remote deal processes and record dry powder

4 min read

U$354.2 billion

The value of US PE-related deals in H1 2021

US private equity activity has seen record-breaking levels of activity in the first half of 2021, fueled by rock bottom interest rates and sky-high levels of unallocated capital.

Global private equity dry powder is at an all-time high of US$1.9 trillion as of January 2021—despite the fact that fundraising slowed in 2020 as investors stepped back from committing capital to new funds to focus on their existing portfolios, according to data from Preqin. Annual US private equity fundraising in 2020 dropped 38.4 percent by value to US$203.2 billion and 36.6 percent by volume at 231 funds, according to Pitchbook. Although down from 2019 levels, fundraising results were still healthy when compared to previous years in the past decade.

With so much capital available to private equity managers, deal activity has surged in the back half of 2020 and into 2021. Buyout deal activity in Q1 2021 reached record quarterly highs for volume and value—only for Q2 to break the value record again. Total buyout deal value of US$354.2 billion for H1 2021 has already surpassed 2020's annual total of US$257.3 billion. Volume for H1 came to 993 deals, compared to 635 in H1 2020 and 1,429 across the whole of 2020.


Rich valuations

The amount of capital chasing deals, including from SPACs, has caused valuations to spike, with US buyout multiples averaging 11.4x EBITDA in 2020 and more than two-thirds of US deals pricing above 11x EBITDA, according to Bain & Co. This has raised some concern about the market becoming frothy, although it has been noted that buyout interest has coalesced around a handful of high-quality assets in resilient sectors such as technology, healthcare and business services. Valuations may be full, but the bar for acquisitions remains high, with firms only stretching for the most desirable targets.

The largest deal of the first half—the US$34 billion buyout of medical supply manufacturer Medline by a consortium comprising Carlyle, Hellman & Friedman, Blackstone and Singaporean sovereign wealth fund GIC—is emblematic of this trend. As a manufacturer of medical masks and gowns, biohazard sanitation equipment and hand sanitizer, Medline has seen demand surge during the pandemic, and the deal is not only the largest US PE buyout since 2007, but among the largest ever.

As the economy opens, there are signs that private equity firms are seeing opportunities to invest in businesses operating in sectors hardest hit by the pandemic at attractive valuations.

As the economy opens, there are signs that private equity firms are seeing opportunities to invest in businesses operating in sectors hardest hit by the pandemic at attractive valuations.

A prominent example of this trend was the acquisition of car rental group Hertz by Apollo Capital, Knighthead Capital and Certares. The US$5.9 billion buyout offer came a year after Hertz filed for bankruptcy in May 2020 amidst pandemic-related disruption.

As sectors other than technology, healthcare and business services open up, private equity firms are expected to start seriously considering deals for targets across a broader mix of industries. This will help firms to manage dry powder and keep to their schedules for deploying capital.


Exit environment

High prices have enabled firms to achieve attractive valuations when selling assets. There were 356 exits worth US$117.3 billion in total in Q1 2021. This was a 41 percent rise in volume on Q1 2020, and a 139 percent increase in value.

The largest exit of the year was another example of a pandemic-related boost to valuations in the healthcare sector. Thermo Fisher, a US-based manufacturer of laboratory instruments, announced it would acquire PPD, a contract research organization (CRO) for the pharma industry. The US$21 billion deal will see investors GIC, Abu Dhabi Investment Authority, Hellman & Friedman and Carlyle exit from the company.

Cash-rich SPACs have further fueled the market. Although competitors to private equity firms in buyout scenarios, SPACs have provided an attractive liquidity strategy for firms when selling. SPAC deals have seen buyout firms able to sell down stakes in prized assets, but also retain minority stakes in them if desired. 

CVC, Leonard Green & Partners and Bain Capital, for example, rolled over a portion of their stakes in marketing agency Advantage Sales & Marketing and paid down debt after a US$5.2 billion deal with the Conyers Park II Acquisition SPAC.



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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

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