Worldwide M&A Projects Shatter Records with $5T in Deals

This was the year for closing deals, with merger and acquisition (M&A) activity around the world tallying $5.63 trillion and shattering records set 15 years ago, Reuters reported on Monday (Dec. 21), citing data from Dealogic.

M&A volumes were up 63 percent by Dec. 16. The last record was set in 2007 with deals totaling $4.42 trillion, according to the data. Last year, the worldwide pandemic pushed M&A deals to a three-year low.

“Corporate balance sheets are incredibly healthy, sitting on $2 trillion of cash in the U.S. alone — and access to capital remains widely available at historically low costs,” Chris Roop, co-head of North America M&A at J.P. Morgan, told Reuters.

See also: Why The Pandemic Is A ‘Black Swan’ That Will Spur Payments M&A

Deals in the U.S. hit $2.61 trillion, Europe went up to $1.26 trillion and Asia Pacific rose to $1.27 trillion, according to the data from Dealogic. M&A deals in the technology and healthcare spaces led the way, which is typical in most years.

Companies raised money from stocks and bonds, while strong equity markets gave big corporates the opportunity to put up their own stock as acquisition currency. Corporate earnings were up, the economy was rebounding, and CEOs were confident to make deals.

“Strong equity markets are a key driver of M&A. When stock prices are high, that usually corresponds with a positive economic outlook and high CEO confidence,” Tom Miles, co-head of Americas M&A at Morgan Stanley, told Reuters.

Read more: M&A Deals Hit Record Levels; SPACs Aid Surge

Private equity deals hit a record $985.2 billion, according to Dealogic, driven by an abundance of easy financing options.

“Investors are deploying cash at an unprecedented pace which means that, on a global basis, asset valuations have peaked to historic levels,” Luigi de Vecchi, chairman of Europe, Middle East, and Africa banking capital markets advisory at Citigroup, told the news outlet.

“The question is whether the prices being paid now will continue to make sense over time,” he added.

You may also enjoy: Banking M&A Activity On a Hot Streak Again