After a full year of pandemic-era M&A activity, the visible uptick in the proportion of all-cash deal volume is a trend to note. Despite the strains on businesses in 2020, all-cash deals comprised 73% of all completed deal volume last year—the highest percentage for any year since 2012, and the second-highest going at least as far back as 2007.
$1.6 trillion in all-cash deals announced in 2020 have reached completion. And it’s worth mentioning that, of this $1.6 trillion in all-cash deal volume, $746.4 billion (47%) was comprised of deals involving private equity parties. This means that private equity had a higher market share in all-cash M&A than it had in the M&A market overall (the overall market share was 38%).
Monthly data show that even when M&A volume took a dive in April and May of last year—directly following the declaration of the pandemic—the vast majority of deals that did get announced in those difficult months and ultimately made it to completion were all-cash deals.
The volume of currently pending and completed all-cash deals announced this January ($209 billion) and February ($245.5 billion) both far exceed the totals for the same months in 2020.
A question: Will 2021 be another big year for all-cash deals?
A thought: If SPAC M&A deals continue at their current pace, that trend will likely have a negative impact on all-cash deal numbers because the majority of special purpose acquisition company mergers tend be either all-stock deals or cash/stock combination deals.
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