Digital leads global rush in M&A deals

The global record for mergers and acquisitions was smashed in the first half of this year as the business world began to recover from the Covid-19 pandemic, according to data from financial intelligence firm Refinitiv.

The report showed that the tech industry - which saw its fortunes climb during the pandemic - accounted for almost a quarter of the $2.8 trillion M&A deals entered into by June 30.“Over the course of 40 years of tracking mergers and acquisitions, we’ve never seen deal-making at this pace, by value and volume,” said Matt Toole, director for deals intelligence at Refinitiv.“As fiscal, monetary, and regulatory policies become clearer over the course of the second half of the year, deal-making will have to adapt, but conditions seem favourable for the current momentum to continue."Although the number of deals is attributed to a post-pandemic bounce-back, buoyed by low interest rates and fiscal stimulus policies adopted by many governments, Mr Toole also believes much of the growth is owed to trends born before the pandemic, including tech industry consolidation, a greater number of private equity firms buying up companies, and a rise of special purpose acquisition companies."As far as the overall landscape, I don’t see anything that’s going to change dramatically in the next six months," added Mr Toole. "The overall conditions that are supporting this amount of M&A and consolidation are here to stay for the rest of this year."In a separate report, Ciesco - a London-based international M&A advisory firm specialising in the technology, digital, media, and marketing sectors - tracked 832 deals in the sector over the first six months of 2021, a 46 per cent rise on the same period last year.Some 59 per cent of the acquisitions so far this year were in the US and UK, although there was an increase in M&A tech activity in all regions globally, except in the Middle East.Ciesco found that digital media represented the sub-sector for which buyers had the greatest appetite, with 172  deals - a 35 per cent increase on the first half of 2020. The next most-popular target was MarTech, where 117 deals were made.The USA experienced 358 deals and the UK 109, representing a rise of almost 40 per cent in both nations on the same period last year. France, Germany, Canada, Netherlands and Sweden made up the next five largest target markets.Chris Sahota, CEO of Ciesco, said: “Digital and business transformation looks set to accelerate at super-speed in 2021 and 2022 with the digital and data-led companies that showed resilience throughout Covid 2020 leading the way.“Confidence is rapidly returning across the entire sector and many businesses. The global economic predictions look optimistic for the sector and the M&A drive has picked up pace from where we stood before the pandemic struck at the end of the first quarter in 2020."We expect this to continue throughout 2021 and anticipate high and competitive activity, particularly from Private Equity firms, with a specific focus on companies within the digital, technology, data and eCommerce landscape.“In 2021, we expect many brands to further change or enhance their approach to become better all-round ethical businesses that embrace purpose, social and environmental sustainability.”

Read more news and views from David Sapsted.

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