Record-breaking M&A run continues at pace

Allen & Overy LLP

Allen & Overy LLP

Dealmaking across the globe continues to break records, as investors take advantage of benign market conditions to deploy capital at an accelerating pace.

Reflecting on the second quarter of last year, when deals ground to a near standstill as the pandemic struck, it seemed inconceivable at the time that the market would recover so quickly and so strongly.

Yet Q3 of 2021 marks the fifth consecutive quarter in which the global value of deals has exceeded USD1 trillion, a run not seen since the financial crisis struck in 2007/8.

Global market conditions favour transactions

Investors are still cash-rich and debt financing at affordable rates remains readily available. While there are lingering concerns that central banks will raise interest rates to keep rising inflation in check, so far this is not deterring dealmakers.

Against that backdrop and despite a quieter August, particularly in North America, global deal value rose in Q3 2021 by 92%, while the number of deals announced was up by 28%.

Cross-border activity continues to recover strongly having been depressed last year with the value of these deals rising by 99% and volume up by 39%. But domestic activity remains equally strong, up by 88% in value and 24% in volume.

Private equity (PE) investors are deploying high levels of accumulated capital at a faster pace and we have seen strong growth in both leveraged buy-outs and trade sales.

However, with auction processes attracting strong competition, deal multiples are once again rising rapidly, which may give some investors pause for thought.

Megadeals once again feature heavily as values rise across the board:

Transactions worth more than USD5 billion

Transaction worth more than USD10 billion

Growth across most regions

Almost all regions are seeing strong growth, with the exception of Eastern Europe/Central Asia, where we saw a 5% increase in deal volumes and a 19% decline in transaction values.

Standout performers included Latin America where values and volumes climbed by 258% and 46% respectively, driven mostly by a burst of activity in Brazil. Deal values in Sub-Saharan Africa were up by 624% although this is largely attributable to Prosus and its voluntary share exchange offer to Naspers shareholders.

TMT sector continues to shine

Telecoms, media and technology deals (TMT) continue to outperform the market, with the value of deals up by 114% and volumes climbing by 39%. A number of megadeals have underpinned this performance, including the spinoff of VMware by Dell and the Discovery/Warner Media transaction.

The life sciences sector continues to be busy with values up by 112%. However, we are seeing fewer megadeals than in the past in favour of more medium-sized deals and alliances, particularly in the biotech and pharma segments.

And some sectors are proving far more resilient than might have been expected at the height of the pandemic. Consumer and retail is a case in point, with deal values up by 49% and volumes rising by 33%.


This time last year market watchers were wondering if the strong, but still nascent, recovery in transactions could be sustained.

That question has been clearly answered in the quarters since.

Potential hazards do lie ahead, not least from the ongoing economic impact of Covid-19. But for now there are good grounds to believe the M&A market will continue to power ahead in the autumn and into 2022.

Global M&A Q3 2021 snapshot


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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