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Record breaker: US M&A 2021

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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

Technology M&A continues record run

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

3 min read

The technology sector continued its record-breaking path through 2021 as digitalization picked up pace. M&A value in 2020 was already strong—it reached US$339 billion, the highest-ever annual value for the sector at that point. However, 2021 blew that total out of the water, more than doubling to US$790 billion. Volumes also hit an all-time high, with 2,194 transactions in 2021, a 69 percent rise on 2020.

Technology assets have been highly prized for some time, although the pandemic has only added to their allure, as businesses accelerated their adoption of digital tools. This is evident in the largest deal of the year—Dell’s spin-off of VMware. The business is focused on digital solutions, including digital workspaces, cloud, networking and app modernization. The persistent trend toward digitization means that investors will continue to focus on cybersecurity, networks and data storage in the coming years.

Green energy provides a boost

The Biden administration’s US$1 trillion infrastructure bill is also helping to boost totals, given its emphasis on energy transition and the development of clean energy technology, including US$7 billion for investment in batteries and US$1.5 billion to develop clean hydrogen. A recent partnership between Amazon and TotalEnergies shows the direction of travel—the collaboration will apparently see TotalEnergies provide 474MWs of renewable energy to Amazon, while the energy company will be able to accelerate its move to the cloud through Amazon’s Web Services.

Energy transition will continue to be a theme for technology M&A for some years to come. We anticipate the move to electric vehicles, for example, to boost activity in battery storage technology and vehicle software.

The second-largest deal of 2021 illustrates another big trend in technology: de-SPAC mergers. Lionheart Acquisition Corporation, a SPAC, acquired medical claims reclamation business MSP Recovery, which has developed a proprietary algorithm to find suitable litigation cases, in a US$44.3 billion transaction. The technology sector has been a fertile hunting ground for SPACs, whose numbers swelled significantly in early 2021. These vehicles are now on the hunt for businesses to merge with—and early-stage pre-revenue technology companies are strong candidates for these deals.

Potential challenges: Valuations, antitrust and FDI

Given demand for tech assets, it’s no surprise that valuations have soared—and there is little reason to believe multiples will fall off in the foreseeable future.

Under the leadership of Lina Khan, the Federal Trade Commission has signaled it will take a tougher stance on antitrust in the US, especially on technology deals. As a result, we are increasingly seeing dealmakers make antitrust filings before signing merger agreements and, in some cases, even before announcing a deal.

CFIUS is also increasingly scrutinizing technology deals involving overseas investors and has demonstrated that it is prepared to examine even non-notified transactions. While neither of these is likely to significantly stem the tide of technology M&A for the foreseeable future, they are adding to the preparation work needed to get deals over the line.

Top technology deals 2021

  1. Dell spun off an 80.65 percent stake in VMware, Inc. for US$60.8 billion
  2. MSP Recovery was acquired by Lionheart 
    Acquisition Corporation for 
    US$44.3 billion
  3. PayPal acquired Pinterest for US$38.9 billion

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