M&A Boom Shows No Sign of Abating After Epic First Half

After a subdued start to 2020, dealmaking surged to record levels in the first half of this year as economic confidence rebounded and companies put money to use after holding off during the pandemic.

Acquisition-hungry buyers have announced $2.5 trillion of deals so far in 2021, an unprecedented number that puts this year on track to be the most active ever. Private equity firms have finally started to spend significant amounts of dry powder, sealing more than $550 billion of deals in the busiest six months on record.

There might be dark clouds on the horizon. The Biden administration is preparing a government-wide plan to encourage competition in markets across the economy, Bloomberg News reported this week, adding to a widespread push for stronger antitrust enforcement in Washington.

And while contemplated changes to capital gains tax may be causing private companies to accelerate deals at present, they could result in less activity next year. Concerns about inflation are also leading some to question how much time is left before the era of rock-bottom interest rates comes to an end, as higher borrowing rates would make it harder to finance deals.

Still, at the moment, mergers and acquisitions advisers are keeping busy and predicting as best they can that the boom will last. They’re also traveling again to see clients, which is adding to that optimistic feeling.

We asked more than half a dozen top dealmakers for their take on the year so far: what’s going on, what’s next, and what doing business during a pandemic has changed forever.

M&A Boom Shows No Sign of Abating After Epic First Half
M&A Boom Shows No Sign of Abating After Epic First Half

Eric Swedenburg

Partner and co-head of the M&A practice at law firm Simpson Thacher & Bartlett

“You’ve kind of got this Goldilocks moment right now where there are large numbers of both sellers and buyers without any meaningful value disconnect. That kind of perfect match environment doesn’t happen all that often but we’ve got it right now.

“It’s as busy as I can ever remember it. The market is humming on the M&A front across nearly every sector. I think the rest of this year will continue to be as busy, if not busier.

“To the extent the regulatory environment does dampen things a bit, I think it’ll only impact some pockets of the market, and I don’t think it’ll really manifest itself this year.”

M&A Boom Shows No Sign of Abating After Epic First Half

Anu Aiyengar

Co-head of global M&A at JPMorgan Chase & Co.

“Sponsors will continue to be very active because they offer a quick path for monetization -- there’s no antitrust approval that you have to wait for. The other big driver is tax. The market seems to think that these things have not been retroactive in the past, so there’s still a window where you can announce a transaction and close it.

“I don’t think there’s a lot of uncertainty for the second half of this year. I think next year – especially if a lot of things get pulled up to this year -- is more uncertain.”

Stephan Feldgoise

Co-head of global M&A at Goldman Sachs Group Inc.

“Covid caused a lot of people on both the buyside and sellside to realize that when you have a window to do things, it makes sense to move as you don’t know what could happen next.

“Covid also taught us that things that no one had predicted could happen.”

Kevin Brunner

Co-head of Global M&A at Bank of America Corp.

M&A Boom Shows No Sign of Abating After Epic First Half

“The focus of corporate boards regarding the acceleration of strategic transformation required in a post pandemic world continues to drive M&A, in particular in the technology, media and health-care sectors.

“Cross–border M&A deal count increased significantly in 2021 driven by a global re-openings as well as reduced economic and geopolitical concerns.”

M&A Boom Shows No Sign of Abating After Epic First Half

Eric Rutkoske

Head of M&A at Guggenheim Securities

“There’s a real focus on the need to acquire technological capabilities, and that’s a secular trend driving a lot of the increase. Companies that were either developing in-house capabilities or targeting those capabilities from an M&A perspective are really accelerating those plans.

“It’s one of the busiest times we’ve been in. Doing almost everything virtually has just increased productivity and velocity of discussion. If you were in a world where you were traveling to two meetings a day, now you’re doing eight meetings a day.”

M&A Boom Shows No Sign of Abating After Epic First Half

Gary Posternack

Global head of M&A at Barclays Plc

“What is striking about the boom is not only the record level of deal volumes, but also the number of transactions that are happening, particularly in the midsize range of $1 billion to $10 billion. The breadth of the market is unprecedented.

“We don’t see anything on the horizon that’s likely to change the dynamic in a material way – we’re anticipating activity to stay at or around these levels. We think companies are being very thoughtful and deliberate about the transactions they’re pursuing.”

Richard Griffiths

Head of M&A for Asia Pacific at BNP Paribas SA, based in Hong Kong

“We have seen a very steady flow of deal activity in Asia so far this year, mostly driven by private equity firms. Investment funds have a lot of dry powder to deploy, and attractive debt financing is available.

“We expect a very active second half of the year for dealmaking in Asia. Large multinational companies will continue to review their presence in the region, which may lead to further M&A. We’re also seeing an increase in outbound M&A interest, which is quite encouraging after the more subdued levels of the past few years.”

M&A Boom Shows No Sign of Abating After Epic First Half

Eamon Brabazon

Co-head of M&A for Europe, the Middle East and Africa at BofA

“We expect European deal flow to accelerate in the second half, with more transformational deals. H2 has the potential to be meaningfully bigger than H1. The latest Covid wave and the slower pace of the vaccine rollout put Europe one to two quarters behind the U.S. in terms of M&A activity. Europe is significantly catching up now and we’re seeing a real burst of activity as we pivot towards the second half of the year.”

Philip Noblet

Head of U.K. Investment Banking at Jefferies Financial Group Inc.

“The M&A boom in the U.K. has been fueled by private equity and infrastructure funds with enormous firepower, historically low interest rates coupled with highly active and aggressive leverage finance markets in Europe and the U.S.

“[There’s also] a continued valuation disconnect between U.K. public companies and their peer sets in the U.S. in particular as well as Europe providing a wealth of opportunities in the face of the pandemic not seen since 2004-2008 for U.K. public to private transactions.”

©2021 Bloomberg L.P.

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