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U.S. M&A Surge Seen Unabated as Companies Are Flush With Cash

Last year, U.S. M&A activity totaled $2.5 trillion, topping the 2015 peak of $1.96 trillion by 28%, a media report says.
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U.S. mergers-and-acquisitions activity hit a record last year and may well roll on in 2022, according to Bloomberg Businessweek.

Companies have strengthened their balance sheets, bulking up on cash. And while interest rates are rising, making deal financing more expensive, rates are still low in historical terms.

Last year, U.S. mergers and acquisitions totaled $2.5 trillion, according to Bloomberg. That topped the previous peak of $1.96 trillion, recorded in 2015, by 28%.

The number of deals exceeded 20,000, up about two-thirds from 2015. And the transactions came in all sizes, unlike in previous years, when huge deals predominated.

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No transaction exceeded $50 billion in 2021, as the Biden administration has expressed some opposition to bigger tieups. That trend away from giant deals may continue, Bloomberg said.

Acquirers traditionally focus on snapping up competitors. But this year they may look for companies that bolster their supply chains, given the disruption to those chains caused by Covid, Bloomberg said.

Bargains are difficult to find, it noted. The median price for deals last year was 16.2 times the earnings of target companies before interest, taxes, depreciation, and amortization, or Ebitda. That was the highest valuation in at least 10 years. published an analysis of 2021 mergers last month. A major deal announced in December was software titan Oracle’s  (ORCL) - Get Oracle Corporation Report $28 billion agreement to acquire health-records-software company Cerner  (CERN) - Get Cerner Corporation Report.

It’s the biggest takeover in Oracle’s history. The company, which Oracle Founder Larry Ellison built largely through acquisitions, would get a pipeline into the hot health-care-technology sector.