June 17, 2024


Technology and Age

Global deal making soars to almost $700 billion so far this year

Companies across the globe clinched almost $700 billion worth of mergers and acquisitions during the first two months of the year, as consolidation in the technology sector fueled a surge in deal activity.

In February alone, deals totaling $405.3 billion were announced globally, an increase of 45% compared with the same month last year, according to data from Refinitiv. That is the highest February on record since the financial data provider’s records began in the 1970s.

The burst of activity takes the value of M&A announced so far this year to $698.7 billion, 56% more than the same period last year and a year-to-date total only exceeded twice before, in the years 2000 — at the peak of the dot-com boom — and in 2018.

Read: Surge in megadeals points to M&A recovery as tech sector dominates

The technology sector dominated global deal activity for the seventh month in a row, with $87 billion worth of deals struck in February, as cash-rich companies embarked on big acquisitions in two of the sectors that have benefited from increased investment during the coronavirus crisis.

Notable deals this year include Japan’s Renesas Electronics
all-cash $6 billion bid for U.K.-based Apple-supplier Dialog Semiconductor
and UnitedHealth Group’s
$8 billion purchase of Change Healthcare
to bolster its technology business in January. 

Read: Europe’s first U.S.-style blank-check company just landed

Special-purpose acquisition companies (SPACs), shell companies that use the proceeds from going public to buy another company, have surged to a record $150.6 billion so far this year and boosted the value of deal making.

Deep-pocketed private equity groups have also stepped up the pace of acquisitions this year, as they look to capitalize on the abundance of cheap financing available to carry out leveraged buyouts.

Read: AT&T poised to sell stake in DirecTV to TPG

“With the number of deals down in 2020 from recent levels, we expect to see a lot of pent-up demand returning to the market. Add to that soaring levels of dry powder and robust markets and 2021 is shaping up to be incredibly busy,” said Hugh MacArthur, global head of Bain & Company’s Private Equity practice, in the consultancy’s 12th annual Global Private Equity Report, released on Monday.

Unspent private capital overall, including that committed to venture, growth and infrastructure funds, has grown in stair-step fashion since 2013 to almost $3 trillion, with around a third of it attributed to buyout funds and SPACs, said Bain & Co on Mar. 1.

Read: Rush of overseas bidders sparks U.K. deal-making boom

But while M&A in the Americas have reached a 20-month high, European activity was down 37% in February, compared with the same month in 2020, despite many bids for U.K companies in recent weeks.

M&A activity in Asia–Pacific dropped to a nine-month low.