In the third quarter of 2021, a total of US$1.4 trillion in global M&A deal activity was reported. Despite a decrease from the US$1.6 trillion recorded in Q2, the total value is the highest of any third quarter on Mergermarket’s record (since 2006). A total of 5,376 deals were announced, representing a 19% increase year-on-year.
North America continued to lead the way in M&A, with a total deal value of US$622.4 billion, more than any other region. Despite a 23% dip from the previous quarter, this was the best third quarter in the region on Mergermarket’s records. Year over year, volume increased slightly, from 1,518 transactions in Q3 2020 to 1,793 this year.
Strong stock market valuations, high levels of capital, and record-low borrowing rates have all spurred increased M&A activity since the second half of 2020. As the winter months approach, the global M&A market faces uncertainty regarding the COVID-19 pandemic’s long-term impacts, as well as concerns about ongoing supply chain challenges and geopolitical tensions between the US and China. Another reason that could reduce transaction enthusiasm is the Federal Reserve’s announcement that it will hike interest rates next year.
However, deal makers have demonstrated their ability to adapt to new circumstances over the last 12 months. With so much money in the market and long-term factors like digitization, the energy transition, and the need to strengthen supply chains driving deals, M&A is expected to have a strong Q4 and 2022.