What to expect after record-shattering year for mergers and acquisitions

2021 is not quite over yet, but it has already been a record breaking, dislocating and brilliant year for mergers and acquisitions.

Driving the news: Global mergers and acquisitions passed the $ 5.5 trillion mark as of last Thursday, including more than $ 2.4 trillion for U.S. destinations, according to Refinitiv.

• And that was before Oracle agreed to pay $ 28 billion for Cerner, or BMO agreed to pay $ 16.3 billion for Bank of the West. Preliminary year-end data will be released by Refinitiv late next week.
• In context, global mergers and acquisitions have never exceeded $ 3.5 trillion before. The previous US high was around $ 1.55 trillion.

Private equity backed deals also hit new highs, topping $ 1 trillion for the first time. Ditto for venture capital (almost no matter how you define it) and SPACs.

What you should know: This is not just about the dollar, which could be partially explained away by stock valuation inflation. There was also an unprecedented number of deals, exceeding 58,000 worldwide and 14,400 in the US

Look ahead: Dealmakers say 2022 will be another very strong year, but there are reasons to expect at least a small pullback.

• Some of these will happen next year, like rate hikes and a controversial US election season.
• Some believe 2021 will be the sweet spot for deal activity that won’t keep up in 2022. For example, deals were brought forward to 2021 due to concerns about a change in tax legislation. And there were also deals that should have been concluded in 2020, but were delayed due to COVID reasons.

The bottom line: Yes, punch holes.