What’s going on?

2021 is on track to become a record-breaking year for M&A, with plenty of companies reporting double or triple-digit % increases in the # of deals they’re striking vs last year.

What does this mean?

• $4 trillion worth of deals have taken place since the start of 2021, more than twice this time last year. That’s partly because :
  • Historically low interest rates have made it cheaper than ever to borrow money, which means they can spend on a buyout they’ve long been waiting for
  • Companies are enjoying record-high stock prices, meaning they don’t need to issue as many new shares or spend as much cash to buy what they want.

Why should I care?

The bigger picture: Technology brings us together

• The dealmaking boom has spanned every sector, but tech firms have been the most popular to constitute around 21% of all M&A activity in 2021 (which is no surprise because when the sector saw the greatest share price increase in 2020).
• In the next 12 months, analysts still expected tech firms to keep the leading position, as they continue to play a critical part in the WFH world.

Zooming out: IB as duck in water

• It follows that IB giants JPMorgan and Goldman Sachs reported strong revenue from their dealmaking businesses, a lot of which came from the Middle East, where governments have been looking for new ways to diversify their economies after the oil market’s 2020 drop.
• IBs around the world have also been busy enough to be scrambling for new hires.

Content source: Finimize (2021) Smash Hits. Available at: https://www.finimize.com/wp/news/smash-hits/ [Accessed on Sep 8, 2021]