The M&A Year 2021 in Review and 2022 Outlook

M&A activity in Europe surged in 2021 with more capital spent on acquisitions than any of the previous seven years. After a relatively poor 2020, transaction volumes bounced back to pre-pandemic levels and more. Has the M&A market scaled new heights in Europe?  

European M&A activity experienced a sharp increase in 2021
Buyers and sellers appear to have recovered their confidence with the prospect of the pandemic now being brought under control. The year 2021 got off to a strong start with deal numbers recovering sharply in the first quarter of the year, reaching levels like in 2019 – a trend that then continued through the fall.

 “M&A came roaring back in 2021 after a bumpy, Covid-dominated 2020”

2021 powered past the previous highs of approximatively 12606 deals set in 2015 and €1507 B deal value set in 2018. Year 2021 surely marked the best European M&A market ever, with dealmakers quickly adapting to the pandemic’s challenges. 

An optimum mix of strong capital markets, ease of pandemic restrictions, rapid vaccine deployment, and persistent accommodative policy were the major factors driving M&A to soar.

Sectors that shaped M&A landscape in Europe in 2021
In 2021, the telecoms and IT sector experienced the largest amount of activity in terms of M&A transactions in Europe, followed by the real estate and construction sector and manufacturing. This increased activity has been seen across both domestic and cross-border markets, though there have also been some significant deals.

Cross-border deals
There have also been interesting cross-border deals in many more sectors, such as apparel and footwear, travel and tourism, consumer goods, oil and gas, food services and mining.

“More cross-border M&A deals are expected during the year 2022”

Looking into 2022, cross-borders deals are expected to keep up. Investors tend to spread their geographical reach to diversify their investments and reduce risk. More generally, year 2022 is expected to be a strong year as buyers put emphasis on digitizing businesses and gaining capabilities through acquisitions. In the first quarter of 2022, deal volumes remained buoyant with high level of capital available. However, M&A’s activity in 2022 remains uncertain and challenging due to inflation, risks of turndown and governments raising interest rates, causing the cost of capital to increase.