PR87662

LONDON, January 19, 2021, /PRNewswire=KYODO JBN/--

- Deal volumes up 18% and deal values increase 94% in second half of 2020

- Megadeals double in second half of the year

- Technology and telecom sub-sectors see highest growth as demand for digital

assets accelerates

- Special-purpose acquisition companies (SPACs) raised about $70 billion in

capital

M&A valuations are soaring, with rich valuations and intense competition for

many digital or technology-based assets driving global deals activity,

according to PwC's latest Global M&A Industry Trends

[https://www.pwc.com/gx/en/services/deals/trends.html ] analysis.

Covering the last six months of 2020, the analysis examines global deals

activity and incorporates insights from PwC's deals industry specialists to

identify the key trends driving M&A activity, and anticipated investment

hotspots in 2021.

In spite of the uncertainty created by COVID-19, the second half of 2020 saw a

surge in M&A activity.

"COVID-19 gave companies a rare glimpse into their future, and many did not

like what they saw. An acceleration of digitalisation and transformation of

their businesses instantly became a top priority, with M&A the fastest way to

make that happen — creating a highly competitive landscape for the right

deals," says Brian Levy, PwC's Global Deals Industries Leader, Partner, PwC US.

Key insights from the second half of 2020 deals activity include:

- Dealmaking jumped in the second half of the year with total global deal

volumes and values increasing by 18% and 94%, respectively compared to the

first half of the year. In addition, both deal volumes and deal values were up

compared to the last six months of 2019.

- The higher deal values in the second half of 2020 were partly due to an

increase in megadeals ($5 billion+). Overall, 56 megadeals were announced in

the second half of 2020, compared to 27 in the first half of the year.

- The technology and telecom sub-sectors saw the highest growth in deal

volumes and values in the second half of 2020, with technology deal volumes up

34% and values up 118%. Telecom deal volumes were up 15% and values

significantly up by almost 300% due to three telecom megadeals.

- On a regional basis, deal volumes increased by 20% in the Americas, 17% in

EMEA and 17% in Asia Pacific between the first and second half of 2020. The

Americas saw the biggest growth in deal values of over 200%, primarily due to

some significant megadeals in the second half of the year.

COVID-19 accelerates deals activity for digital and technology assets in a

highly competitive market

In demand assets have commanded high valuations and fierce competition, driven

by

macroeconomic factors. These include low interest rates, a desire to acquire

innovative, digital or technology-enabled businesses and an abundance of

available capital from both corporate (over $7.6 trillion in cash and

marketable securities) and private equity buyers ($1.7 trillion).

By comparison, assets in sectors that have been hardest hit by the pandemic

like industrial manufacturing or those being shaped by factors such as the

transformation to net zero carbon emissions are creating structural changes

that companies will need to address. Where the future viability of their

business models are challenged, companies may look to distressed M&A

opportunities or restructuring to preserve value.

Deal makers widen assessment of value creation to non-traditional sources

Non-traditional sources of value creation such as the impact of environmental,

social and governance factors (ESG) are increasingly being considered by deal

makers and factored into strategic decision-making and due diligence, as they

focus on protecting and maximising returns from high valuations and fierce

demand.

"With so much capital out there, good businesses are commanding high multiples

and achieving them. If this continues - and I believe it will - then the need

to double down on value creation is now more relevant than ever for successful

M&A," says Malcolm Lloyd, Global Deals Leader, Partner, PwC Spain.

The impact of a hot IPO market on M&A

The last six months saw the prevalence of the use of special-purpose

acquisition companies (SPACs) to pool investor capital for acquisition

opportunities in a highly active IPO market. In 2020, SPACs raised about $70

billion in capital and accounted for more than half of all US IPOs. Private

equity firms have been key players in the recent SPAC boom, finding them a

useful alternative source of capital. More SPAC activity is expected in 2021,

especially involving assets such as electric vehicle charging infrastructure,

power storage, and healthcare technology.

Read PwC's Global M&A Industry Trends

[https://www.pwc.com/gx/en/services/deals/trends.html ] for more insights on

2020 and 2021.

Notes

PwC's Global M&A Industry Trends is a biannual analysis of global deals

activity across five industries — consumer markets (CM), technology, media and

telecommunications (TMT), health industries (HI), energy, utilities and

resources (EU&R), and industrial manufacturing and automotive (IM&A).

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SOURCE: PwC Global Corporate Affairs