M&A Is Surging Because the Urge to Merge Can’t Be Denied
Mergers and acquisitions are roaring back in 2021, and that bodes well for activity going into next year, too.
With the flood of mergers and acquisitions this year, you could be forgiven for not recalling how deal making largely ground to a halt at this time last year—as did much of the economy. Even previously announced deals came under pressure, as buyers feared making acquisitions just as uncertainties were spiking. How could buyers extract synergies in the face of shuttered businesses or locked-down customers?
Now that there’s a more-than-viable path forward, M&A is picking up due to a backlog of activity as well as new opportunities that emerged during the pandemic
M&T Bank Plans to Buy People’s United. Here’s What Wall Street Is Saying.
The pandemic has increased the rationale for regional tie-ups as banks look to boost their scale and digital offerings amid low interest rates that will squeeze potential profits.
Continue reading. Data from Goldman Sachs Group (ticker: GS) show that April’s announced-deal volumes increased to $506 billion—more than fourfold year over year. True, that eye-popping number is coming off of a startlingly low base, but the recent momentum of new deals is expected to carry into May 2022, Goldman says.
The bank projects a 12% year-over-year increase in deals over the next 12 months because CEO confidence remains above prepandemic levels, and interest rates remain low. More than half of those deals will be in the U.S.
While nearly all sectors saw deal volumes at least double, the urge to merge has been highest in telecommunications, healthcare, and energy—with deal levels increasing as much as fivefold. Mergers have also been rising in financial services, which you can bank on continuing.