Our thinking

Record breaker: US M&A 2021

What's inside

US M&A had an extraordinary year in 2021, with total deal value reaching US$2.6 trillion—surpassing US$2 trillion for the first time

M&A roars into 2022 on momentum of a record-shattering year

Challenges loom—including the possibilities of tighter regulations, rising inflation and a stock market correction—but markets show little sign of slowing down

The value of US M&A blew past the US$2 trillion mark in 2021, ending the year more than 30 percent above the previous record set in 2015. US deal value reached US$2.6 trillion, twice the value of 2020, and volume set a new record at 7,896 transactions.

Confidence reigned among dealmakers as stock markets continued to rise; increasing numbers of SPACs sought merger targets; and private equity houses set new records, deploying some of the sector's historic levels of dry powder. All of which was underwritten by flexible and cheap debt financing.

Technology was a major driver of M&A, fueled by pandemic-related trends that continued to accelerate deployment of digital technologies across all sectors. The tech sector itself led the sector charts. Companies with product mixes boosted by the pandemic, including those in the pharma and healthcare sector, turned to M&A to complement and add to their existing business portfolios.

Despite a continuing positive outlook, dealmakers will need to keep potential risks in mind in 2022. Under the Biden administration, CFIUS went on a recruitment drive, and it will clearly continue to take a more aggressive stance across sectors, particularly when deals involve technology.

Indeed, regulatory scrutiny is tightening from a number of angles. The Securities and Exchange Commission under chair Gary Gensler is taking a tougher stance on enforcement and has its sights set on SPACs, cryptocurrencies and ESG. And the Federal Trade Commission has announced far-reaching antitrust policy changes that may require companies that reach settlements to observe a ten-year mandatory clearance period on new acquisitions and disposals—the new rules would even apply to buyers of affected assets.

This increasingly tough approach to regulating M&A has so far had little impact on dealmakers' appetites for transactions—although new rules may eventually render some deals less attractive.

In response to recent inflation, the Fed will increase interest rates, which could pose another challenge for dealmakers. But given that rates are so low by historical standards, increases are unlikely to have any direct significant effect on M&A for most of 2022.

One of the biggest questions is whether stock markets will continue to hold up. A correction seems inevitable at some point, but it's unclear what might trigger one in the foreseeable future. For example, markets seem to have shrugged off concerns related to the emergence of the Omicron variant of COVID-19—at least at the time of writing. And private equity still has a mountain of capital to deploy. Recent events, however, suggest that markets will be volatile.

As a result, although regulatory hurdles continue to multiply, we expect 2022 will be another strong year for US M&A, with robust activity through the first half and possibly well beyond.


Surging M&A surpasses expectations

All the stars aligned in 2021, creating a confident and exceptionally busy M&A market

Record breaker: US M&A 2021

Record year for private equity dealmaking

Transaction values more than doubled year-on-year, as firms deployed ever-larger amounts of dry powder

Record breaker: US M&A 2021

What's next for SPACs?

Dynamics may be changing as the focus shifts to de-SPACs and regulatory scrutiny intensifies

Record breaker: US M&A 2021


Sector overview: Strong M&A activity pervades nearly every sector

In what was a stand-out year, M&A picked up the pace in almost every sector

Record breaker: US M&A 2021

Oil & gas M&A trends up due to recovery in demand and the pressing need for clean energy

Dealmaking may continue to rise, as price volatility abates and companies embrace energy transition

Record breaker: US M&A 2021

Technology M&A continues record run

The pervasiveness of technology, particularly since the pandemic, continues to drive deals to all-time highs

Record breaker: US M&A 2021

Pharma and healthcare deliver strong results

Despite the absence of megadeals, M&A in the sector climbed from 2020 levels thanks in part to strong PE and SPAC activity

Record breaker: US M&A 2021

Real estate deals come back to life

After dropping in 2020, real estate M&A ramped up significantly in 2021

Record breaker: US M&A 2021

In Focus

Antitrust: Extended timelines and broader scope

The Federal Trade Commission is taking an increasingly stringent approach to antitrust investigations

Record breaker: US M&A 2021

Cross-border deals face increased CFIUS scrutiny

Increased sector scope and concerns around a more aggressive approach to identifying non-notified transactions is leading to rising numbers of filings

Record breaker: US M&A 2021

SEC enforcement ramps up

Dealmakers should be braced for a more aggressive stance under Chair Gary Gensler

Record breaker: US M&A 2021

Financing likely to continue largely as is, despite inflationary worries

Borrower-friendly terms over the past few years have helped boost M&A totals—and a number of factors suggest the financing will not change dramatically in 2022

Record breaker: US M&A 2021

Good security practices for data and networks are essential to M&A success

With data privacy laws tightening and cyberattacks on the rise, due diligence of technology networks and data processes should be a top priority for dealmakers

Record breaker: US M&A 2021

Notable decisions from Delaware courts

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

Record breaker: US M&A 2021

What's in store for 2022?

Five factors that will shape dealmaking over the coming 12 months

Record breaker: US M&A 2021
Record breaker: US M&A 2021

SEC enforcement ramps up

Dealmakers should be braced for a more aggressive stance under Chair Gary Gensler

3 min read

The appointment of Gary Gensler to Chair of the Securities and Exchange Commission (SEC) signaled a break from the Trump administration, when enforcement actions reduced overall. Since taking office, his speeches have outlined his priorities and his intention to take a tougher stance on enforcement. The fact that full-year figures published by the SEC in November show a 7 percent rise on 2020 demonstrates a more aggressive approach.

Based on his recent pronouncements, Gensler is making his mark on enforcement processes in a number of ways. One is a pivoting back toward admissions of misconduct. During the Trump years, settlements with the SEC on a "neither admit nor deny" basis were prevalent, offering defendants some protection in areas such as private litigation. However, the SEC looks likely to seek more admissions of misconduct to increase accountability, where there is a public interest for this to happen.

Another is pursuing novel or high-impact cases, with Gensler indicating he will not shy away from accusations of regulation through enforcement. An insider trading case brought in the summer of 2021, for example, expanded the misappropriation theory in a way not seen before. Under Gensler, the SEC is also seeking to shorten investigations by cutting back on Wells meetings (in which defendants can discuss their case with SEC staff) and instead focus on bringing enforcement actions. This may mean a reduction in the number of settlements reached or that defendants will need to settle on more onerous terms.

And finally, indications are that the SEC will seek much more detailed information for entities to qualify for co-operation credit. The result could be that entities and, potentially, C-suite executives shoulder responsibility for misconduct as well as the individuals investigated.

New frontiers

Gensler has also recently reiterated particular areas of focus for the SEC. One of these is SPACs, where he has outlined concerns around lower disclosure requirements than in IPOs and a lack of gatekeepers looking out for investor interests. He has also expressed concerns about the conflict of interest between, on one side, investors that do not redeem before the de-SPAC merger, and on the other, sponsors and investors who cash out or invest through the PIPE transaction. The SEC is clearly looking at the potential for misleading statements in the market as well. Those involved in SPACs will therefore need to focus heavily on disclosures and ensure that any potential conflicts of interest are transparent to investors.

ESG has also moved up on the SEC's agenda. The creation of an ESG taskforce and the announcement that the SEC will deploy data analytics to identify material gaps or misleading statements, in particular around climate disclosures, clearly illustrate the direction of travel. This will raise the due diligence bar for dealmakers looking at M&A involving a company with potential climate risks or social risks.

Crytocurrencies are also high on the SEC enforcement agenda, with concerns raised around the decentralized and anonymous nature of these digital assets. The SEC is taking the view that these fall under securities laws and it has announced a number of cases involving lending platforms and cryptocurrency exchanges in addition to those already recently investigated. Dealmakers will need to consider carefully during due diligence whether any of the target's digital assets could be deemed securities.

Lastly, while there has been a lot of press around SEC enforcement targeting private equity, the signs are that there is no significant shift away from the approach of the past few years, with potential conflicts of interest the main area for investigations.

White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.

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.

© 2022 White & Case LLP

Service areas