M&A Deals Hit Record Levels; SPACs Aid Surge

Global mergers and acquisitions (M&As) have set record amounts for three months in a row, the latest being May. Reuters reported on Friday (June 4) that the trend is due to low interest rates, rising stock prices and increased interest in making deals in sectors that did well during the COVID-19 crisis.

Last month, $532.9 billion worth of deals were announced, the highest ever for the month of May. The total value of pending and completed deals announced for the first five months of 2021 hit $2.4 trillion, according to Refinitiv.

In the U.S. alone, there was $1.3 trillion in M&A activity during those months, while Europe saw $411 billion in such deals. In the Asia-Pacific region, the total amounted to $387 billion.

Reuters said that during those five months, there were a total of 428 deals worth more than $1 billion apiece, with just 131 such deals during the same period in 2020.

Notable deals have included the merger of AT&T’s Warner Media and Discovery, which airs HGTV and TLC. That’s the biggest M&A deal so far in 2021, with the value of the combined company pegged at $120 billion.

“Following a period of uncertainty, many businesses and executives are looking at ways to fast-track expansion, maturing quickly by merging with companies that have complementary capabilities,” said Paul Roberts, CEO at ad-tech firm Kubient.

Deals involving special-purpose acquisition companies (SPACs) continued on a tear, hitting a record $348 billion in deals so far in 2021. A SPAC is formed when a company that lacks operations goes public, with the sole purpose of raising cash. Announcements of deals in the tech sector were even higher, hitting a total of $503 billion.

Jim McCarthy, president at i2c, told PYMNTS that a great digital shift will spur deals of all kinds. That will mean action in the payments processing, credit and financial services sectors. He added that a number of executives around the payments landscape have said they are on an M&A “hunt.” One reason: Would-be acquirers are sitting on lots of money.