Global mergers and acquisition (M&A) activity soared by 88% to $2.3 trillion in H2 2020, amounting to the strongest second half in history and overtaking the previous record held by the 46% increase in H2 1997. H2 2020 was also the strongest second half in history in terms of deal value.

According to the research data analysed and published by Sijoiturahastot, the total number of deals worth $10 billion and above was 21% below the 2019 figure, but the number of deals valued between $5 billion and $10 billion increased 38% year-on-year, and their value rose by 36%. The total number of so-called “mega deals” ($5 billion+) across 2020 was 116, up from 97 in 2019.

The strong second half nearly offset the “disaster” that was H1 2020, which saw global M&A deal value in the first six months of the year totalling $1.2 trillion – a 41% decline on 2019. It was also the lowest H1 figure since H1 2013, with the total number of deals closed sinking by 16%.

For two consecutive quarters in H2 2020, the M&A deal value surpassed $1 trillion, with deal value for Q3 and Q4 2020 totalling $2.3 trillion. However, the figures are somewhat misleading, as there was still a 4% decline in the total number of deals in 2020, marking a four-year low.

In the US, the global deal value for the year declined by 21% year-on-year from $2.2 trillion in 2019 to $1.4 trillion in 2020. At the peak of the pandemic, the US also had an 80% decline in M&A activity altogether. Meanwhile in Europe, there was a 34% uptick as the figure rose from $735 billion in 2019 to $988.6 billion last year. Asia Pacific similarly had a 15% increase as its total deal value went from $758 billion in 2019 to $871.5 billion.

Technology was the leading sector in 2020, posting a 49% uptick to reach $679.2 billion and accounting for a considerable 19% of total M&A in the year to date. Financials came in second with a total deal value at $489.6 billion, down 6% year-on-year, while energy & power were third making up 12% of deal activity, despite posting a 13% year-on-year decline.

The industrial sector followed with deals totalling $400.6 billion, a 10% decline on 2019, and accounting for 11% of total M&A. In contrast, the consumer sector was among the most exposed, falling 16% at $156 billion.          

According to EY, the stronger than expected H2 rebound in global deal-making is set to continue into 2021, with one of the reasons cited being the “growing popularity” of Special Purpose Acquisition Companies (SPACs). It alleges that these new entities could bring “additional forms of capital to the market”, and adds that “alternative deal models such as joint ventures and alliances” could also fuel deal-making in the coming year.

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Bronte Carvalho
Junior Journalist at the UK Investor Magazine. Focuses primarily on finance and business content. Has personal interests in Middle Eastern politics, human rights issues, and sustainability initiatives.