Home / News / India /  Global M&A transactions hit all-time high of $5.9 trillion in 2021: Bain & Co
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Mumbai: After a lacklustre 2020, the value of mergers and acquisitions (M&A) rebounded to an all-time high of $5.9 trillion in 2021, with soaring valuations and accommodating deal financing, said consulting firm Bain & Co in a report on Wednesday. 

Some buyers were motivated by the plethora of available assets and low cost of capital; others jumped into the fray to stay competitive as their peers did deals. Companies raced to acquire both transformative capabilities and to scale up in a historic land grab, the report noted.

“This robust market included an increasingly diverse map of dealmakers and deal types. Unlike the comparatively simple deal market of 20 years ago, which predominately comprised corporate buyers and some financial investor activity, today’s M&A landscape includes significant participation not only from corporate buyers but also greater value from add-on deals (in which investors buy and combine multiple platform assets to create scale), financial investors, special purpose acquisition companies (SPACs), and venture capital (VC)/corporate venture capital (CVC)," Bain said.

While strategic buyers (including both corporate buyers and private equity portfolio add-ons) saw total deal value rise by 47% year over year in 2021, these other forms of M&A grew about two times faster, it added.

Overall strategic M&A deal values hit $3.8 trillion in 2021. This makes it the second-highest year for strategic deals.

“In our global survey of 281 executives, a full 80% noted that deal activity was part of their broader business strategy in 2021, and more than half (52%) cited the availability of attractive assets on the market as a driver of deals this year," the Bain report said.

Within strategic M&A, some areas notably are booming more than others, Bain said.

“Tech assets in particular have decoupled from the broader M&A market, with median enterprise value/EBITDA multiples at 25 times. This is partially explained by the broad applicability of digital capabilities required to remain competitive across sectors. Healthcare similarly saw asset prices soar, with median multiples of 20 times. In both tech and healthcare, buyers are willing to pay a premium for high margin, high-growth assets. Meanwhile, non-tech and non-healthcare assets were also up vs. prior years, although median multiples of 14 times were well below the extremes seen in the other two industries," the report said.

However, with sharp uptake in M&A deals in 2021, strategic buyers across industries also cited pain from these record deal prices. At the same time, public market trading multiples have risen even more quickly than strategic deal valuations, especially over the past two years.

“Given this gap in valuations, companies should be able to capture returns from buying and integrating assets at lower multiples. Buyers worried about an overheated market could likewise finance their deals with stock rather than cash, yet there was not an underlying shift in stock vs. cash transactions," the report said.

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