MERGE MANIA IS ON
Deals set record
Companies bought and sold each other at a record pace in 2021, with 1,047 deals — each valued at more than $100 million — inked globally, according to a study.
And researchers say they don’t expect the mergersand-acquisitions activity to slow down anytime soon.
Last year’s M&A boom is the largest on record since Willis Towers Watson, the consultancy that completed the study, started keeping records in 2008, just before the financial crisis. The firm tallied deals whose value was $100 million or more.
For comparison, in 2020, there were only 674 M&A deals done globally that had individual values of $100 million or more.
“The M&A boom . . . looks set to continue — fueled by abundant investment capital, strong equity markets and cheap debt, Duncan Smithson, senior director at Willis, told The Post.
Another engine under the expected 2022 rise in deals: companies looking to make their businesses “greener” by hunting for targets “with the right climate credentials,” Smithson said. That way, they can cash in on the so-called environmental, social and governance investing trend, also known as ESG, where companies are screened to meet certain metrics.
Still, once companies buy other companies, it’s not necessarily all that good for business: The firms completing M&A deals last year outperformed competitors by just 1.4 percentage points when considering their stock prices compared with companies that didn’t engage in M&A activity, according to the Willis study, which was done in conjunction with the Bayes Business School in London.
Even so, that share performance was the best since 2016 by companies that had engaged in M&A activity: In fact, it’s the first time since then that M&A-involved companies logged a positive share-price performance, the study said.
While Smithson is optimistic the boom will continue this year, he cautioned dealmakers will be worried about factors such as rising inflation.
“Deal speed, preparation and quality due diligence will be essential if dealmakers’ expectations are to be met,” he said.
The study valued 2021’s M&A transactions at about $1.4 trillion, up from $1.05 trillion last year. That’s slightly lower than the study’s 2016 high-water mark of nearly $1.5 trillion. Willis Towers considered 2021 to be a record-breaking year when it comes to the number of deals over $100 million, which were the highest ever, it said.