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ANALYSIS: Cross-Border M&A Defied the Pandemic in a Record Q1

April 26, 2021, 9:01 AM

The first quarter of 2021—which broke all M&A volume records—also saw the highest volume of cross-border M&A deals for any first quarter since 2007. The cross-border deal frenzy is an unlikely and remarkable development in a global economy entering its second year of a pandemic.

Last quarter saw announcements of 922 currently pending or completed cross-border mergers and acquisitions deals valued at $1 million or greater resulting in control of the acquired company or assets, with an aggregate value of $358.3 billion. This cross-border deal volume comfortably surpassed recent pre-pandemic first quarters: it represents a stunning 78% increase in volume over the first quarter of 2020, and a 68% increase over the first quarter of 2019. Last quarter’s cross-border volume accounted for 41% of all global M&A volume in the first quarter—up from the 36% market share that cross-border deals held in the first quarter of 2020.

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Explore cross-border deal volumes in the interactive graphic above. Use the drop-down menu to select target counties, hover over acquirer countries to highlight their associated volume streams, and zoom in to enlarge the globe. If you’re reading this article on the Bloomberg Terminal, click here to view this interactive graphic.

The top five target countries that won the highest volume of cross-border M&A deals in the first quarter were the U.S. ($120.9 billion); the U.K. ($83.7 billion); the Netherlands ($13.9 billion); Canada ($12.5 billion); and Hong Kong ($10.8 billion). For deals involving U.S. targets, the top five acquirer countries in the first quarter, ranked by deal volume, were Canada, Ireland, Japan, Switzerland, and Sweden.

By target region, Europe, which is experiencing a rapid buyout fury, saw the highest volume of cross-border deals of any region in the first quarter with $169.2 billion in cross-border M&A deals, marking an 81% increase in volume over Q1 2020. Europe’s first-quarter cross-border volume was boosted by 26 private equity buyout deals with an aggregate value of $36.9 billion. North American targets came in second place with $135.5 billion in cross-border deals, marking a 151% increase in volume for Q1 2021—a noticeable boost after a slower 2020, which saw lower North American volume than the year prior. Asia-Pacific took third place, bringing in $41 billion in deals.

Looking at recent monthly deal volumes, it seems that the first quarter’s cross-border volume may have consisted of fresh deal activity as opposed to a backlog of pandemic deals that were put on hold in the months directly following the declaration of the pandemic. During the initial pandemic period, M&A activity was at record lows. Subsequently, there were large spikes in cross-border deal volume in September and December 2020 that more than made up for the lost months of April and May, and most likely included any released backlog of deals. December 2020’s volume reached $190.8 billion, the highest monthly volume for any month going back several years, which was followed by a dip in January 2021, and volume has steady climbed upward since.

Although cross-border M&A held its share of the global M&A market in 2020, year-over-year volumes suffered visibly compared to 2019. 2021 cross-border volumes are very much in the green thus far. This new deal activity suggests that cross-border dealmakers have settled into the new normal.

With assistance from Jacquelyn Palmer.

Bloomberg Law subscribers can find related content on our M&A Deal Analytics resource.

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