Jun 22, 2021 - Economy

U.S. merger and acquisition activity to surpass 2020's total deal value

Data: PwC analysis of Refinitiv data; Chart: Axios Visuals
Data: PwC analysis of Refinitiv data; Chart: Axios Visuals

Merger and acquisition activity in the U.S. is on pace to substantially surpass last year’s total deal value, as companies sit on tons of cash, and debt financing remains cheap, according to a PwC outlook published this morning.

Why it matters: It’s another sign that the economic recovery is firing on all cylinders. Even with public markets trading at sky-high valuations, buyers are stepping in.

By the numbers: From 2016 to 2020, the annual U.S. deal value totaled an average of $1.8 trillion.

  • Through May of this year, U.S. deal value already amounts to $1.4 trillion.

What they’re saying: PwC predicts that the year-over-year volume increase this year could exceed 10%.

Context: Megadeals, and "not-quite-megadeals," are a large driver of the activity.

  • Through May, 54 megadeals (at least $5 billion in size) have been announced, matching the number of megadeals in all of last year.
  • Since then, Medline unveiled the largest pure LBO since the financial crisis.
  • Deals between $1 billion and $5 billion are also accelerating, with 200 transactions in the first five months of the year, compared with an average of 230 announcements annually in the previous five years.

What to watch: Private equity and SPAC activity through the second half could help drive deal flow higher.

  • Private equity firms are "more active than ever," with 39% of this year’s deal volume — compared to the mid-to-high 20% area in 2017-19. And they’re still sitting on loads of capital to deploy.
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