Investment & Economy

Forecast of M & a trend in 2021 From Morgan Stanley

The following is the Forecast of M & a trend in 2021 From Morgan Stanley recommended by And this article belongs to the classification: Investment & Economy.

In 2020, the M & a market will develop rapidly in stages. The trading volume started mildly. Compared with 2019, there are fewer block transactions, but the M & a market has great potential. Then, most of the transactions stalled because of New Coronavirus’s attack. Many companies are focusing on moving their employees to work from home, supporting their balance sheets and maximizing their liquidity, thus shelving merger plans they may have made.

In the spring, the epidemic has fragmented the global economy, accelerating the trend of industries such as technology, while other industries such as physical retail, tourism and real estate are struggling with “home” measures. Companies, investors and bankers adapt to the virtual transaction, relatively unaffected by the lock-in conditions, and even promote the gradual backflow of M & A.

In the summer, the number and size of transactions are growing every month. Key announcements in technology and healthcare have led to big mergers, such as teladoc health’s $17 billion acquisition of livongo health. Despite a significant slowdown in transactions announced in the second quarter of 2020, the surge in trading activity in the second half of the year was enough to make annual turnover exceed $3 trillion for the seventh consecutive time. In the fourth quarter alone, there were a record 1250 global M & A transactions, totaling more than $1 trillion.

These main trends may be the characteristics of the strong M & a market this year:

1. Supporting market with low cost of capital

Access to cheap and sufficient capital provides support for the M & a market in the second half of 2020, which may still provide space for M & A transactions in 2021.

2. Industries affected by covid-19

The M & A activities of various industries will be differentiated in 2020, and the M & A activities of industries that are least affected by covid-19 are the strongest. At the same time, deals are even rarer in areas such as aviation, energy, real estate and retail that lack a way to recover in the near future.

3. The company keeps expanding

In the turbulent business environment of last year, the companies that made stock by stock M & A to expand their scale constituted many of the largest M & A transactions.

4. The recovery of cross border M & A

In 2020, international M & A activities will decline for the second consecutive year. For companies that want to engage in cross-border transactions, covid-19 will only increase the uncertainty brought about by global geopolitical tensions, brexit and ongoing regulatory scrutiny in some industries. Due to restrictions on global tourism, companies are more hesitant to conduct virtual due diligence on target companies in foreign jurisdictions.

5. Rich capital from private equity

Private equity companies are also likely to continue to make a significant contribution to the volume of mergers and acquisitions in 2021. In 2020, the transactions supported by the sponsors account for 26% of the overall M & A activities, the highest level before the global financial crisis. SEG: SaaS M & A report in the second quarter of 2018 Thomson Reuters: global M & a volume reached US $3.5 trillion in 2017 pitchbook: average M & a volume in Europe and North America increased by 66% in 2017 synergy Research: the total value of data center M & A transactions in 2017 reached US $20 billion KPMG: the number of M & A transactions in emerging markets in the first half of 2013 decreased by 22.4% compared with the same period last year A review of M & A transactions of top ten enterprises in Digi capital: in the first half of 2016, the M & a volume of the game industry reached 18.6 billion US dollars. Thomson Reuters: in 2015, the global M & a volume has risen to 4.6 trillion US dollars. Morgan Stanley: Apple’s market value is expected to exceed 1 trillion US dollars in one year. Morgan Stanley: Microsoft’s market value is expected to reach 1 trillion US dollars in the next 12 months

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