According to the latest report “Global dealmakers: Cross-border M&A in 2021”, prepared by Baker Tilly International in partnership with Mergermarket, after an abysmal first half for M&A in 2020, dealmakers roared back into action. But will the momentum be sustained?
Early 2020 was a wasteland for M&A, as investors froze transactions, markets panicked, and vendors wondered if they had a business left to sell. By the second half, however, everything changed.
Dealmakers rediscovered their investment appetite following the freefall induced by the COVID-19 pandemic, completing US$2.5 trillion in mergers and acquisitions in the second half of 2020. M&A transaction value increased to 122% and was 5% higher in volume (16,700 deals) compared to H1.
Deal activity for Q3 and Q4 were among the highest on record as dealmakers spent their way through the crisis. This unprecedented drive helped propel average deal value above that of 2019, averting a lull and more prolonged recovery similar to that in the post-GFC period. As confidence continues to grow, the question arises: Is it onward and upward in 2021?
“The economy is gaining momentum and it is clear that investors are betting on a return to normal (even if it were to be a new normal) and want to make up for the downtime of H1 2020. In terms of sectors, there are no surprises there. TMT, energy, finance and the pharmaceutical industry are on the top. Poland’s 2020 total did not see a reduction in the number and value of transactions compared to the previous year. Similar to global trends, TMT, energy and finance are in the spotlight. Poland will definitely continue this trend in 2021. There should be a lot of activity in the area of renewable energy, where wind and photovoltaic projects will be in the focus of investors’ attention. Another fact worth noting is the extremely low cost of foreign capital, which should support high valuations,” said Krzysztof Horodko, Managing Partner, Baker Tilly TPA.