US M&A hits record highs
The US enjoyed record levels of M&A activity in H1 2021, as dealmakers made up for lost time caused by pandemic-related disruptions
A year of historic highs and rapid change
Global Head of M&A
Partner|New York
US M&A surged to record levels in the face of pandemic-related challenges and potentially dramatic regulatory shifts
We are just heading into August, but it is already safe to say that 2021 is a historic year for US M&A. Deal value rose to a new high of US$1.27 trillion in H1 2021. This was a 324 percent increase compared to H1 2020—and was virtually equivalent to the total value recorded in all of 2020.
This torrent of deals was the result of a perfect storm of activity on the part of strategic, PE and SPAC dealmakers. The pandemic drove many corporates to offload non-core divisions and acquire digital capabilities. Corporates that thrived during the pandemic used M&A to consolidate gains. PE firms strove to deploy their massive troves of dry powder. And SPACs searched for opportunities to invest the record levels of funds they raised.
The election of Joe Biden as President significantly reduced political uncertainty that may have dampened activity in 2020 and this spurred dealmaking in 2021. However, the administration's policies could also complicate dealmaking.
The Biden Administration is taking vigorous steps to reshape antitrust policies and practices in the US. In July, the President issued an Executive Order to promote competition and lower prices throughout the economy through increased antitrust enforcement. These efforts are likely to intensify during the run-up to the US midterm elections in November 2022. The effects were already visible in the recent decision by Aon and Willis Towers Watson to call off their merger, which they first announced in March 2020. The deal would have created the world's largest insurance broker, but the Department of Justice opposed the deal on the grounds that it would eliminate competition, reduce innovation and lead to higher prices.
CFIUS has shown that it will mostly continue with the more aggressive approach to evaluating deals for national security concerns that was established by the previous administration. And with the appointment of Gary Gensler as Chair of the Securities and Exchange Commission, the administration signaled it will take a more aggressive approach to securities law enforcement.
There are a number of other looming risks as well. The possibility of rising inflation and the end of government support measures related to the pandemic could shock the market. And dealmakers are concerned about potentially frothy valuations.
But perhaps the greatest variable remains the uncertain trajectory of the pandemic. Though the US was on a course of increasing optimism as vaccines were rolled out, recent concerns about the Delta variant of COVID-19 have raised questions—and exacerbated political divisions—about how quickly economies should open up.
Despite these challenges, the outlook for dealmaking remains very positive. US GDP forecasts are upbeat, stock markets are at historic highs, and interests remain low. Moreover, the Biden Administration's economic stimulus efforts and ambitious plans for energy transition and infrastructure development will inject large sums of capital into the economy. We expect US M&A to remain very active in the second half of 2021.
Private equity deal activity forges ahead
US private equity has rallied following pandemic lockdowns, thanks to adaptations to remote deal processes and record dry powder
Sectors
Sector overview: TMT and healthcare continue to dominate
TMT M&A tops the sector charts again
Oil & gas M&A rebounds after pandemic lows
After a year of volatility, the oil & gas industry has stabilized and M&A activity has resumed
Technology dealmaking goes from strength to strength
Technology M&A activity is thriving in 2021 as dealmakers continue to turn to the sector in search of assets with high-quality earnings and growth prospects
Healthcare displays strong deal activity post-pandemic
The value of healthcare M&A in H1 surpassed pre-pandemic levels
Consumer and retail M&A picks up speed
Deals in the consumer and retail sector show signs of recovery as consumer spending
rallies post-pandemic
Power & renewables M&A soars on back of green policies
The power and renewables industry is positioned for a sustained period of strong deal
activity as the US focuses on hitting net zero carbon emissions by 2050
Real estate sees welcome revival in M&A in 2021
M&A value among real estate firms quadrupled year-on-year in H1, after a tough 2020
Infrastructure M&A forges ahead, even before government boost
After a pause, investment in infrastructure has ballooned, even before the Biden administration's US$1 trillion-plus plan is passed
In focus
US dealmaking braces for more challenging antitrust environment
After campaigning for the presidency on a platform that included more aggressive antitrust enforcement, Joe Biden has taken early steps to honor those pledges
CFIUS set to continue careful scrutiny under Biden Administration
President Joe Biden's approach to the national security risks posed by foreignbacked M&A may differ in style from his predecessor, but not in substance
Reverse break-up fees emerge in response to deal terminations
Even as economies pick up, dealmakers have maintained focus on managing the risk of broken deals
SEC to take tougher line on enforcement
New Securities and Exchange Commission Chair Gary Gensler has put scrutiny of
SPACs and private funds at the top of his agenda
Notable decisions from Delaware courts
In the first half of 2021, Delaware courts issued several decisions affecting M&A dealmaking
Six trends
Six trends to look out for in the second half of 2021
After a turbulent 18 months which saw M&A crash before an impressive return to form, H2 2021 is set for continued strong deal activity, as well as new challenges
