BY Richard Summerfield
The uncertainty and chaos caused by the COVID-19 pandemic saw M&A deal volumes and values fall sharply in the first half of 2020, according to a new report from WilmerHale, though there was a stark improvement in the second half of the year.
The report – ‘M&A Report 2021’ – notes that the number of M&A transactions worldwide declined by 6 percent, from 48,613 deals in 2019 to 45,507 in 2020. Furthermore, global M&A deal value decreased by 15 percent, from $3.35 trillion to $2.83 trillion. The average deal size in 2020 was $62.3m, down 10 percent from $68.9m in 2019.
Of course, there were variations in deal volume and value across different regions. Both volume and value were up in the Asia-Pacific region, but fell most prominently in the US and Europe. In the US, deal volume fell by 14 percent, from 20,603 transactions in 2019 to 17,748 in 2020. US deal value also fell 26 percent, from $2.14 trillion to $1.58 trillion. The average deal size in the US fell by 14 percent, from $104.m to $89.1m. The number of billion-dollar transactions involving US companies decreased by 11 percent, from 296 in 2019 to 234 in 2020, while their total value fell by 27 percent, from $1.57 trillion to $1.15 trillion.
In Europe, the number of transactions fell for the fifth consecutive year, dropping 11 percent from 18,844 in 2019 to 16,738 in 2020. Total deal value fell by 3 percent, from $1.18 trillion to $1.15 trillion. On the other hand, the Asia-Pacific region saw deal volume increase by 11 percent, from 10,092 transactions in 2019 to 11,241 in 2020, while total deal value grew by 26 percent, from $721.1bn to $911.6bn.
Despite the lingering pandemic, the report paints a brighter picture for 2021. With falling valuations, an abundance of private equity dry powder and the re-emergence of SPAC deals, among other factors such as the rollout of COVID-19 vaccines, there are reasons to be optimistic about deal drivers in the second half of the year.
Report: M&A Report 2021