Looking Inside a $5 Trillion Global M&A Boom

February 1, 2022

In recent years, private equity data provider Pitchbook has produced some amazing insights into the state of private equity and its subcomponent – mergers and acquisitions. Their most recent note on the subject is one such report. Here’s a review.

The Broad Picture

First, the broad picture. According to Pitchbook, global mergers and acquisition (M&A) activity has gone from $2.4 trillion in 2011 to $5.0 trillion in 2021. Although deal value has more than doubled, the deal count has not, having gone from 23,043 in 2011 to 38,231 in 2021. The estimated 2021 figures present what was an amazing year in 2021. Deals grew by almost 13,000 and overall deal value expanded by $1.8 trillion. That’s $1.8 trillion in just one year! Simply amazing.

Source: Pitchbook

Mergers and Acquisitions by Acquirer Type

The next view looks at M&A count by the two main acquirer types – sponsor backed and corporate M&A. Interestingly, sponsor-backed M&A has gone from 5,36 in 2011 to 11,517 in 2021. Never in its history has sponsor-backed M&A activity grown by over 2,000 deals in one year. And that happened in 2021.

Shifting to the corporate M&A view, corporate M&A deal counts have gone from 17,681 in 2011 to 18,917 in 2021, a less dramatic increase compared to sponsor-backed deals.

The yellow line captures the percentage of M&A delas that were sponsor-backed. Sponsor-backed deals have increasingly become more prevalent in the market, having grown from 23% in 2011 to a high of 37.8% in 2021. If the trend continues – and all indications are that it will – the global M&A marketplace may see over 50% of deal counts coming from sponsor-backed by 2030. Times are changing in the M&A world.

Source: Pitchbook

A Third View of the M&A Universe

The next view is a third take on the state of global M&A activity. The figure shows the share of M&A value by form of payment. Before looking, what percentage would you guess was made up by stock in 2021? What about cash – what percentage would you guess that would represent?

As shown, stock M&A was the least popular of the three depicted payment forms, making up a little over 20% of M&A activity in 2021. The next most popular form of payment behind M&A deals was a combination of stock and cash, capturing about 30% of activity. Lastly, the largest portion of deal activity stemmed from cash, capturing almost half of all M&A payments.

Source: Pitchbook

Summing Up

Overall, M&A activity is booming, with the numbers seen in 2021 the highest one record. If the trends continue into 2022, M&A managers may have more than just a little party at the end of the year.

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