In 2021, the global volume of Corporate Transactions reached a new historic record, totaling US$ 5.8 trillion, a growth of 63% when compared to 2020, according to Dealogic. With the current liquidity in the financial markets and the low cost of capital, the Mergers and Acquisitions movement should follow this strong trend observed in recent years, despite persistent inflation and imminent interest rate hikes worldwide.
A survey conducted in Brazil by a local Mergers & Acquisitions Portal indicates 1,880 M&A deals were completed in 2021, representing a 63% growth in the volume of transactions, when compared to the 1,151 registered in 2020. Last year 58% of transactions were up to R$ 50 million (~US$ 9M), and the total amount is estimated as of R$ 715 billion (~US$ 128 Bn), a 105% growth in relation to 2020, considering the preliminary numbers known so far (December 2021). The most active sectors in 2021 in Brazil were (i) Information Technology (IT), (ii) Telecommunications and Media, (iii) Hospitals and Health Clinical Analysis Lab, and (iv) Financial Institution.
We are going through a unique moment in history, with many mergers and acquisitions opportunities arising, due to the economic degradation resulting from the measures implemented by governments during 2020 and 2021, as well as the infrastructure investment agenda in Brazil and the numerous IPOs carried out locally. According to a B3 (Brazilian Stock and Exchange) report (Nov/21), IPOs reached 45 offerings, which raised BRL 65.2 billion (~US$ 11,65 Bn), an increase of 48.5% compared to 2020, with 29 IPOs. If we consider Follow-On operations, it totals 71 IPOs and reach R$ 130.1 billion (~US$ 23,2 Bn).
Many companies are fragile, with a high level of indebtedness, and ended up becoming acquisition targets. As a result of the accelerated transformations imposed by the market itself, companies were impelled to invest heavily in the development and acquisition of new technologies, innovation, new models and ways of working and doing business. In this scenario, market consolidation and transformative transactions play a vital role.