GlobalData estimates that global M&A deal value and volume activity saw strong growth in 2021, with a total deal value of $3.8 trillion, an increase of 37.5% compared to 2020, and 38,000 deals overall, which is equal to year-on-year (YoY) volume growth of 17.5%.

The automotive sector saw the highest growth in deal value in 2021 at 108%, followed by the healthcare sector with 94%. The healthcare sector also witnessed the highest growth in terms of deal volume with 62% growth.

The driving force behind automotive M&As in 2021

Batteries, electric vehicles (EV) and autonomous vehicles are three prominent themes driving deals in the automotive sector, but the automotive industry is undergoing a profound period of overall disruption. Four megatrends, under the acronym ‘CASE’, are shaking up business strategies: connected cars, autonomous vehicles, shared mobility services and electrification.

In addition, the industry is still feeling the lingering impact of the global Covid-19 pandemic, which intensifies the challenges of navigating a period of fundamental reinvention in the industry. This has put unprecedented pressure on company finances, infrastructure and supply chains. Given these pressures, there is the likelihood of even more deals in the automotive sector in the next couple of years.

The rise of electric vehicles

The electric vehicle landscape is an interesting blend of traditional automakers and suppliers rubbing shoulders with cutting-edge start-ups and tech giants, both of which are looking to snatch market share as EV production ramps up. Across the industry, automakers and suppliers are announcing bold strategies to pivot away from producing traditional combustion vehicles and toward electric models. This has seen many companies race to secure vital supplies of batteries, EV components and the raw materials needed to create them.

Lucid Motors acquired Churchill Capital for $4.6bn, Unifrax I acquired Lyda for $1.3bn, Faraday & Future merged with Property Solutions Acquisition for $1bn and Gogoro acquired Poema Global for $1bn. These are some of the more noteworthy billion-dollar deals influenced by the electric vehicles theme.

Covid-19 accelerated technology adoption

The growing use of technology over the past few years, driven by pandemic-induced lockdowns and social distancing measures, has led other sectors to adopt technology via mergers and acquisitions. Healthcare-related sectors were most affected in 2020 and the growing adoption of technology helped drive deal activity throughout 2021. Big data and artificial intelligence (AI) were two prominent tech themes that drove a significant proportion of healthcare deals.

Covid-19 drove the healthcare industry to embrace advanced technologies to streamline everything from patient management to revenue cycle management. The sector is focused on providing top-tier care to patients and has decided to partner with tech firms to develop or integrate advanced capabilities, such as AI, across their vast sets of patient and institutional data. After all, healthcare providers all sit on large troves of patient and institutional data, all of which can be used to optimise care delivery, lower costs and open new and personalised routes of care for patients. This is expected to hold prominent sway on healthcare innovators in the future.

Megadeals in 2021

Several mega deals drove the automotive sector. These include the acquisition of CMC Materials by Entegris for $6.5bn, a consortium of investors acquiring Mavis Tire Express Services for $6bn, Lucid Motors acquiring Churchill Capital for $4.6bn and Qualcomm acquiring Vioneer for $4.5bn.

The top deals in the healthcare sector included Cerner’s acquisition by Oracle for $29.6bn, Hellman and Friedman and Bain Capital acquiring athenahealth for $17bn and OptumInsight acquiring Change Healthcare for $13bn.

Automotive and healthcare were hit hard by the pandemic, but have adopted M&As as a key element of their strategies to accelerate their digital transformation and adapt to new challenges. Similarly, the travel and tourism, mining and medical devices sectors have also been active in terms of M&A deals for similar reasons.

We can expect to see many other sectors embrace this opportunity and give us more mega M&A deals in the near future, sustaining the deal-making momentum through 2022.

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