Software deals push Q3 M&A activity to US$1.4 trillion record

Despite a drop on the previous quarter, Q3 2021 global M&A value represented the strongest Q3 on Mergermarket record

The third quarter is usually a sleepy one for M&A—but not so this year. A total of US$1.4 trillion in deal activity was announced in Q3. Although a drop compared to the US$1.6 trillion recorded in Q2, the value total is the highest of any third quarter on Mergermarket record (since 2006), and the first time that global M&A value in Q3 has topped the US$1 trillion mark. The total value is 40% higher than the previous record high for a third quarter, the US$999.4 billion generated in Q3 2020.

Volume was also elevated compared to previous years, albeit less so than value. A total of 5,376 transactions were announced, a 19% increase compared to the same quarter in 2020.

European M&A picks up steam 

North America continued to perform strongly in M&A, recording US$622.4 billion in deal value—more than any other region. Although this was a 23% drop on the previous quarter, it represents the strongest Q3 for value in the region on Mergermarket record. Volume ticked up year on year, from 1,518 transactions in Q3 2020 to 1,793 in Q3 this year.

Contrary to other regions, which saw M&A value dip compared to previous quarters in Q3, the third quarter was the best quarter so far this year in Europe. After a more subdued H1 compared to other regions, Western Europe recorded US$380.1 billion in deal value, a 42% rise on the previous quarter and an 18% rise on the same quarter the previous year. Volume, on the other hand, dropped 38% on the previous quarter to 1,770 deals.

The largest of these transactions was the US$29.4 billion offer for German real estate firm Deutsche Wohnen by Vonovia, which was announced at the start of August—a week after its previous offer was rejected by a majority of shareholders.

Central and Eastern Europe also had a good quarter in value terms. The region saw the strongest quarter-on-quarter rise in terms of value. A total of US$23.8 billion in M&A deal value was announced over Q3—more than double both the US$9.4 billion announced in the previous quarter and the US$9 billion announced in Q3 2020. Volume ticked up by 19% on Q3 2020, reaching a total of 164 transactions.

The largest deal in the region was the take-private of UK-listed Czech cybersecurity firm Avast by NortonLifeLock, the US-based cybersecurity software firm, in a deal valuing Avast at between US$8.6 billion and US$9.2 billion, depending on how Avast shareholders exercise their options.

Software M&A keeps topping previous records

Software deals overall, beyond the NortonLifeLock/Avast deal, once again dominated over the third quarter with the strongest quarter for M&A value yet on Mergermarket record. M&A value in the sector totaled US$248.3 billion—marking the fifth consecutive quarter that the sector set a new high record in terms of deal value. This was due to large-ticket transactions, as the number of transactions dropped to 860, which is high by historical standards, but the lowest of any quarter this year.

The largest transaction of the quarter was the acquisition of MSP Recovery by Lionheart Acquisition Corporation II, now the largest SPAC M&A deal on record. The US$44.3 billion deal has proven controversial as the target—a technology-enabled healthcare litigation firm—is expecting a huge jump in revenues from a projected US$1 billion in 2023 to US$23 billion in 2026. The transaction is further considered controversial as it will not include PIPE (private investment in public equity) investment, a typical feature in SPAC deals.

Other significant deals in the sector include payment technology firm Square’s acquisition of Afterpay, an Australian provider of “Buy Now Pay Later” services, in a deal prompted by the growth in ecommerce transactions since the start of the COVID-19 pandemic. The US$26.6 billion deal is the largest ever M&A deal in Australia.

SPACs transactions proceed

The massive Lionheart/MSP deal is an indication that the SPAC boom is far from over, despite a cool-off in new listings precipitated by greater regulatory scrutiny in the asset class.

There were 97 new listings of SPACs in Q3, raising US$18.1 billion in capital, according to data from Dealogic. Although this was a slight uptick on the 79 listings worth US$17.3 billion the previous quarter, it is a far cry from the 305 IPOs in the first quarter of this year which raised a staggering US$135.3 billion—far and away the highest quarter on record for SPAC listings.

All of that capital needs to find a home—and merger activity has continued. In total, there were 65 announcements of SPAC M&A deals in the third quarter, with deal value of US$166.9 billion in aggregate, according to Dealogic. Although this represents a slight drop from the 75 such transactions the previous quarter, it represents a 12% increase in value terms.

So far in 2021, there have been 238 M&A deals involving SPACs globally, totaling US$556.8 billion in value—already more than the 121 transactions worth US$219.8 billion in 2020—previously the best year by far for such transactions.


M&A activity has continued to be elevated since the second half of last year, fueled by strong stock market valuations, high levels of capital, and record-low rates for borrowing. As the winter months approach, greater uncertainty about the continued effects of the COVID-19 pandemic, as well as worries about ongoing issues in the global supply chain and geopolitical tensions between the US and China, loom over the global M&A market. The Federal Reserve’s indication that it would raise interest rates next year is another factor which could dampen deal enthusiasm.

But deal practitioners have proven over the past 12 months that they are able to adapt to new challenges. With so much capital in the market, and long-term trends like digitalization, the energy transition, and a need to shore up supply chains motivating deals, M&A is set for a robust Q4 and 2022.

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