Deal making that made history: Q4’21 M&A trends in Private equity

PE deal making in 2021 set an all-time high. Overall deal volume increased by 35 percent from the previous year while deal value jumped by 77 percent on the back of many high-value transactions.

Among other factors, M&A was driven by ample dry powder, ultra-low interest rates, and possible hikes to capital gains and corporate taxes which accelerated deals before policy implementation.

A deeper look at these PE trends reveals key characteristics of the market last year.

• Domestic deals still made up the bulk of PE transactions (72 percent) and outbound deals increased slightly compared to 2020
• The technology, media, & telecom and industrial manufacturing sectors led in deal value—together constituting 60 percent of PE’s total—primarily driven by the pursuit of digital transformation and tech capabilities
• The healthcare & life sciences and consumer & retail sectors registered the highest growth rate in deal value—132 percent and 90 percent, respectively
• SPACs continued to play an increasing role in PE funds’ exit strategy compared to traditional IPOs
• PE firms increasingly incorporated ESG-driven investments into their portfolios

Looking ahead to 2022, abundant liquidity and dry powder are likely to drive continued high levels of PE M&A activity. But growth may cool somewhat due to a more hawkish monetary policy, inflation, high valuation multiples, and other headwinds. Overall deal appetite remains strong. According to a yearend KPMG survey, 65 percent of senior executive respondents plan to increase their deal activity in 2022.

Our 2021 report unpacks these trends and what’s ahead—including deep dives on three topics:

Procurement excellence: Helping portfolio companies deal with cost pressures

ESG: Getting serious about ESG

Download the full report to uncover what is happening in PE, how deals are being done today—and why.