Allen & Overy Global M&A Insights 2021 report chronicles a record year in M&A: Technology deals predominate in the market
The value of M&A transactions has increased by nearly 50% compared to 2020 in Hungary
Allen & Overy’s Global M&A Insights report for 2021 details a scorching year in M&A worldwide, with the value of global M&A transactions in 2021 surging to a record high of over USD5.8 trillion, an increase of 64% on 2020, and 48% higher than 2018, the previous highest year on record. Technology-sector deals were the main drivers for this huge impetus, with M&A values in the tech sector alone exceeding USD1 trillion in 2021, for the first time, a 71% increase vs 2020.
Commenting on this trend, Richard Browne, global co-head of Corporate/M&A at Allen & Overy said: "The real powerhouse behind this incredibly resilient market was the technology sector, which saw a 71% increase in deal values year-on-year, exceeding the USD1 trillion mark for the first time. Deals within the sector accounted for 20% of all global M&A deals by value and 22% by volume."
Digital infrastructure transactions continue to increase globally, with investors particularly focused on mobile towers, data centres and fibre networks. Telecom companies, pressed to release capital to invest in their customer offerings and new technologies like Fibre-to-the-Home and 5G mobile, continue to divest infrastructure, particularly towers, fibre networks and data centres, with dedicated digital infrastructure investors moving in to operate them. Meanwhile, technology and life sciences companies overwhelmingly dominated fundraising markets in 2021, beating all previous records for amounts raised, reflecting the hunger for cash among high-growth technology companies as they look to fund R&D programmes, acquire talent, assets and customers, invest in new technologies, and move into new markets.
On these trends, David Broadley, co-head Allen & Overy’s Global Corporate Practice, continued: "In an extraordinary year, we have seen transactions at every level of the technology market, from small start-ups being bought for their IP and innovative products through to megadeals, as well-funded, high-growth companies look to expand into new markets, buy into new technologies or look to hire new talent. Evidently, these companies, whose products and services have long been distributed worldwide, are now global in their footprint too. It’s also an indication of a growing confidence that we are experiencing a sustained trend, fuelled by global demand for innovation and digital transformation."
Europe had its share of the year’s activity, rising to a 14-year high in M&A value, at almost USD1.42 trillion for the year, according to Refinitiv figures, from 20,125 deals, as assets in the UK cheapened by the aftermath of Brexit provided especially attractive targets, topping the European national totals at almost $415.8 billion from 5,014 deals. Continental Europe delivered the single biggest deal, however, with the USD50 billion merger of Fiat Chrysler Automobiles and the French PSA Group (formerly Peugeot Citroën) to create Stellantis. Central and Eastern Europe was still able to register significant transactions over the year, delivering just over USD32.1 billion of value from 1,343 deals, with technology, financial services, and infrastructure/energy deals especially prominent. Hungary, meanwhile, saw some USD1.676 billion (HUF 520.8 billion) of value from 100 deals, an increase of nearly 50% compared to 2020.
“CEE has been able to join in the M&A jamboree of 2021, with mega-deals such as Avast plc’s EUR7.3 billion [USD8.35 billion] merger with NortonLifeLock Inc., the EUR 2.5 billion [USD2.86 billion] takeover of Aviva Poland by Allianz, and the EUR 2.01 billion [USD2.3 billion] acquisition of the Czech Republic’s Ceska Telekomunikacni Infrastruktura (CETIN) by Singapore’s GIC, demonstrating that the region has assets and opportunities large enough to attract multi-billion deals and leading international acquirers,” Balázs Sahin-Tóth, counsel at Allen & Overy Kádár Ügyvédi Iroda, Budapest, observed.
Allen & Overy’s understanding of the Hungarian and CEE market is demonstrated by its advisory work on some of the major regional transactions of the last year. The firm advised Aegon N.V on the EUR830 million (USD950.4 million) sale of its insurance, pension and asset management business in Hungary, Poland, Romania and Turkey to Vienna Insurance Group AG Wiener Versicherung Gruppe; advised DoorDash on the USD8 billion acquisition of Wolt Enterprises, a Helsinki-based international technology company offering services in the food delivery, grocery and retail sectors in over 22 jurisdictions worldwide; and also advised W.A.G Payment Solutions on its acquisition of 100% of WebEye Telematics, a leading fleet management solution provider in CEE, from the founders and management.
The report also considers among others the requirements for AI due diligence and what technology investors are doing to retain and incentivise key personnel in their acquisitions.
*Figures represent deals announced between 1 January and 31 December 2021. Data provided by Refinitiv.
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