RECAP OF M&A ACTIVITY IN 2021 - Jaisveen Kaur Kohli

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As the year 2020 and 2021 has been a topsy-turvy road in the path of the global economies, they have been observed to be either a boon or a bane for the sectors of the economy. The stock market has been soaring high in 2021 with the highest value of Nifty 50, Sensex, NASDAQ, etc. The year 2021 proves to be the best year for IPOs and listings with 2388 IPOs raising approximately US$453.3 billion. With these, the global activity owing to the inorganic growth of firms has also been skyrocketing on the front of post-pandemic impacts and pandemic recovery.

With the aggregate valuation of $6 trillion in the year 2021, the deal value of H1 of 2021 increased by more than 136% and 22% as compared to the first and second half, respectively, of the pandemic-stricken year 2020. According to BCG, the deal volume also showed a similar trend of a record-breaking splurge with an increase of more than 32% YOY. This has been driven by the low-interest rates and the economic recovery post-pandemic. The economic activity in M&A deals directly impacts the activities of other fields including law and taxation.

The deal value is led by North America by breaking records in both inbound and outbound transactions in the year 2021. This has been followed by the Middle East, Southeast Asia, and Australia-New Zealand among the other regions. This surge in M&A activity with more than 52000 deals, including cross-border deals, has been witnessed by various industries primarily led by technology, retail, energy and power, and banking and financial services. Among these deals, 757 M&A and joint ventures have been made worth more than $1 billion each making the Q3 of 2021 the fifth consecutive quarter for a consolidated deal value of more than $1 trillion.

Factors driving these records to break:

The boom in Mergers & Acquisitions has been highly driven by a variety of factors. Core competencies, strengths, and weaknesses, bargaining power of buyers and suppliers of the company are categorized as the internal factors driving the volume of M&A deals. Whereas the external factors including the industrial structure, level of competition in the industry, and regulations and policies led down by the government have been identified as the major driving force for M&A activities. The two

·Expansion opportunities: The emerging markets and globalization has enabled firms to offer the best goods and services at the lowest possible prices has increased the level of competition resulting in the desire for expansion. This has resulted in high M&A deal volumes and values in a short duration of time

ESG: The increasing focus on sustainability and the green economy has given the companies with the accessibility and feasibility to ESG factors a competitive advantage in the industry. The companies are, nowadays, forming strategic alliances, joint ventures, and mergers & acquisitions to tap their potential in green supply chain and sustainability.

Future Outlook for 2022:

As observed by the survey conducted by KPMG, it is forecasted that by the year 2025 approximately 86% of the firms will equip inorganic methods of growth including joint ventures, mergers and acquisitions, and strategic alliances. It can be said that another variant of Coronavirus can lead to a slow return to normal life resulting in an increased potential for M&A activities. The merger opportunities will also heavily rely on the economic outlook, i.e., inflation, standard of living, interest rates, etc., and emerging technologies including cryptocurrencies. With an expectation of a moderate increase of technology and increased demand for improved in-house capabilities, in addition to post-pandemic recovery, will be affecting the economic activities around the globe.


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