M&A activity in the United States is on track to significantly exceed last year’s total deal value as companies have tons of cash and debt financing remains cheap, according to PwC. outlook published this morning.
Why is this important: This is another sign that the economic recovery is in full swing. Even though public markets are trading at exorbitant valuations, buyers are stepping in.
In numbers : From 2016 to 2020, the annual value of transactions in the United States averaged $ 1.8 trillion.
- Until May of this year, the value of the transaction in the United States already stands at $ 1.4 trillion.
What they say : PwC predicts that the year-over-year volume increase this year could exceed 10%.
The context: Mega-deals and “not quite mega-deals” are a major driver of activity.
- As of May, 54 mega-deals (at least $ 5 billion in size) have been announced, matching the number of mega-deals last year.
- Medline has since unveiled the biggest pure LBO since the financial crisis.
- Transactions between $ 1 billion and $ 5 billion are also accelerating, with 200 transactions in the first five months of the year, compared to an average of 230 announcements per year in the previous five years.
What to watch: Private equity and PSPC activities in the second half of the year could help increase deal flow.
- Private equity firms are “more active than ever,” with 39% of transaction volume this year, up from 20% in 2017-19. And they’re still sitting on piles of capital to deploy.