Global Merger & Aquisition Volumes Hit Record High In 2021, Breach $5 Trillion For First Time

Global dealmaking is set to maintain its scorching pace next year, after a historic year for merger and acquisition (M&A) activity that was fueled largely by easy availability of cheap financing and booming stock markets.

Global M&A volumes topped $5 trillion for the first time ever, comfortably eclipsing the previous record of $4.55 trillion set in 2007, Dealogic data showed. The overall value of M&A stood at $5.8 trillion in 2021, up 64% from a year earlier, according to Refinitiv.

Flush with cash and encouraged by soaring stock market valuations, large buyout funds, corporates and financiers struck 62,193 deals in 2021, up 24% from the year-earlier period, as all-time records tumbled during each month of the year.

Investment bankers said they are expecting the dealmaking frenzy to continue well into next year, despite looming interest rate hikes.Higher interest rates increase borrowing costs, which may slow down M&A activity. However, deal advisers still expect a flurry of large mergers in 2022.

Accommodative monetary policies from the U.S. Federal Reserve fueled a stock market rally and gave company executives access to cheap financing, which in turn emboldened them to go after large targets.

The United States led the way for M&A, accounting for nearly half of global volumes – the value of M&A nearly doubled to $2.5 trillion in 2021, despite a tougher antitrust environment under the Biden administration.

The largest deals of the year included AT&T Inc’s (T.N) $43 billion deal to merge its media businesses with Discovery Inc (DISCA.O); the $34 billion leveraged buyout of Medline Industries Inc; Canadian Pacific Railway’s (CP.TO) $31 billion takeover of Kansas City Southern (KSU.N) ; and the breakups of American corporate behemoths General Electric Co and Johnson & Johnson (JNJ.N) .

According to a survey of dealmakers and advisers by Grant Thornton LLP, over two-thirds of participants believe deal volumes will grow despite challenges posed by regulations and the pandemic.

Deals in sector such as technology, financials, industrials, and energy and power accounted for the bulk of M&A volumes. Buyouts backed by private-equity firms more than doubled this year to cross the $1 trillion mark for the first time ever, according to Refinitiv data.

Despite a slowdown in activity in the second half, dealmaking involving special purpose acquisition companies further boosted M&A volumes in 2021. SPAC deals accounted for about 10% of the global M&A volumes and added several billions of dollars to the overall tally.

Analysts say the U.S. economy has proven resilient in the face of pandemic-related challenges, and many expect the global economy will still expand at a well-above-trend pace.

After initially tumbling in December, world stocks recovered over the holiday period as investors became reassured economies could handle the surge in Omicron coronavirus cases, and are heading back toward record highs.

“As far as COVID is concerned, for now, market participants may stay willing to add to their risk exposures, and perhaps push equity indices to new highs, as several nations around the globe held off from imposing fresh lockdowns, despite record infections around the globe the last few days,” said Charalambos Pissouros, head of research at Cyprus-based brokerage JFD Group.

The dollar index fell 0.418% on Friday. On Wall Street, New Year’s Eve trading ended near record highs on Friday. read more

All three major U.S. stock indexes scored monthly, quarterly and annual gains, notching their biggest three-year advance since 1999.

Reuters GraphicsInvestors have held onto expectations for resilience in the global recovery into 2022 and the prospect of further gains if money remains cheap and corporate profitability high.

This year’s “everything rally” has seen a wall of cheap central bank cash, government stimulus and strong economic rebounds out of the pandemic make it hard not to profit from soaring asset prices.

U.S. stocks have powered the global rally as record-breaking earnings figures from Big Tech companies excited investors. This week the S&P 500 hit another record high.

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Source: Global M&A volumes hit record high in 2021, breach $5 trillion for first time | Reuters

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Get to know everything about what Post-Merger Integration (PMI) means, 4 Steps to PMI Success and possible challenges of PMI.

Post-merger integration is the process of unifying two entities and their assets, people, tasks, and resources in a manner that creates the most value for the future of the enterprise by realizing efficiencies and synergies.

From an IT perspective, PMI is a complex process requiring the leadership of enterprise architects to ensure a smooth process. According to the 2021 LeanIX M&A Report, nearly 90% of EAs are involved in post-merger integration, with the following use cases named as most prevalent.

EN-M&A-WP-Landing_Page_Preview_Image

From Fintech’s Top Founders To Wall Street’s Best Dealmakers: 30 Under 30 Finance 2022

In 2016, while Tarek Mansour was an analyst at Goldman Sachs, he watched clients nervously trying to hedge their investments in case the Brexit referendum passed. They had no direct way to do it, and the insight became the seed for a startup idea—Kalshi, an exchange where investors could make unusual bets on future events. He cofounded the New York company with fellow MIT alum Luana Lopes Lara in 2018.

The hardest part: regulatory approval. “In one day we both called 65 lawyers,” Mansour says. “All of whom said, ‘People have been trying to do this since the ’80s, and it’s not happening.’” But they persevered—and in November 2020, Kalshi became the first federally regulated event-based trading exchange in U.S. history.

Today you can use Kalshi to bet on how many Americans will ultimately get a Covid vaccine or whether this year will be the hottest on record. Billionaires Charles Schwab and Henry Kravis have invested in the startup alongside blue-chip VC shop Sequoia. Kalshi has raised $36 million and processed $10 million in trades since launching in July 2021.


Eleven of the thirty companies featured on our 2022 list were crypto firms, an all-time high.


Mansour and Lopes Lara are two of the honorees on the 30 Under 30 list in finance for 2022, which covers traditional financial services, fintech and crypto.

The list makers were chosen from nearly one thousand nominations and were evaluated by an all-star set of judges, including Paul Gu, a cofounder and head of product at fintech lender Upstart; Joey Krug, the co-chief investment officer of crypto fund Pantera; Jackie Reses, the former head of Square Capital and a fintech angel investor; and Lauren Taylor Wolf, a cofounder and managing partner at activist hedge fund Impactive Capital.

As bitcoin reached a record price of more than $68,000 in 2021, crypto entrepreneurs made a strong showing on our list. Eleven of the companies featured were crypto firms, an all-time high. One example is Antonio Juliano, the founder and CEO of Dydx, a trading platform for professional investors outside the U.S. to buy and sell cryptocurrency derivatives.

During a couple days in September, Dydx surpassed Coinbase in daily trading volume. Juliano expects the 19-person startup to bring in $125 million in revenue this year and $81 million in net profit. Elena Nadolinski, the founder and CEO of privacy-focused cryptocurrency company Iron Fish, is another. Iron Fish uses a novel and advanced cryptography tool called zero-knowledge proofs to make crypto transactions private.

While nonfungible tokens (NFTs) have taken off this year, Alex Atallah, the cofounder and CTO of dominant NFT marketplace OpenSea, has helped his company reach $300 million in revenue, up from less than $1 million last year. Now he’s on track to become one of crypto’s newest billionaires.

Many list makers also hailed from fintech. Scott Kazmierowicz and Michael Spelfogel started Cardless in 2019, creating software that lets brands launch their own co-branded credit cards. They’ve hatched cards for pro sports teams like the Boston Celtics, Cleveland Cavaliers and Miami Marlins. Cardless has raised more than $50 million and is valued at $315 million, according to PitchBook.

Akash Magoon cofounded insurtech startup Nayya, which helps people with tasks like picking the most cost-effective health insurance plan and finding lower-cost pharmacies. It has 400 corporate customers and is on track to reach $7 million in revenue in 2021.

Ambika Acharya cofounded Weav, which aggregates sales data for small businesses and makes it easily accessible, letting lenders see it in seconds to assess borrower risk. Corporate credit card startup Brex was Weav’s first customer, using it to power its instant payouts feature. In August 2021, Brex bought Weav for $50 million.

Leaders in traditional financial services made up one-third of our list. Hannah Buchan is a partner at Beehouse, a $300 million investment firm focused on the legal cannabis industry, which has deployed tens of millions of dollars across private equity, stocks and debt deals.

Alex Nesbitt is a principal at BC Partners, helping close deals like the $3.4 billion SPAC merger and IPO between Cyxtera Technologies, one of the largest data center companies in the U.S., and Starboard Value Acquisition Corp., a blank check company.

And Mason Liang is a portfolio manager at Millennium Management, a $50 billion hedge fund, where he oversees one of the largest teams in charge of the firm’s “quantamental” strategy, which combines quantitative and fundamental analysis to assess investments.

This year’s list was a team effort by by Jeff Kauflin, Michael del Castillo and Maria Abreu.

For a link to our complete Finance list, click here and for full 30 Under 30 coverage, click here

I lead our fintech coverage at Forbes and also cover crypto. I edit our annual Fintech 50 list and 30 Under 30 list for fintech, and I’ve written frequently about leadership and

Source: From Fintech’s Top Founders To Wall Street’s Best Dealmakers: 30 Under 30 Finance 2022

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30 Under 30 2022: Finance

Credit Suisse To Tighten The Reins After String of Scandals

Credit Suisse will unveil a new centralized structure on Thursday in an attempt to bring its far-flung divisions to heel and draw a line under a string of scandals that have cost the Swiss bank billions of dollars, two sources said.

Over the past year, Credit Suisse has been fined for arranging a fraudulent loan to Mozambique, tarnished by its involvement with defunct financier Greensill, racked up $5.5 billion in losses when U.S. family office Archegos collapsed, and been rebuked by regulators for spying on executives.

Credit Suisse drafted in seasoned banker Antonio Horta-Osorio as chairman in April to stop the rot and he will lay out his charter to reform Switzerland’s second-biggest bank on Thursday when it presents third-quarter results.

One key change is expected to be the creation of a single wealth management division that caters to a global elite, centralizing oversight at the bank’s headquarters in Zurich, two people familiar with the matter told Reuters.

Under the current structure put in place six years ago, wealth management straddles three divisions: a Swiss business, an Asia-Pacific arm catering mainly to rich Chinese and an international arm based out of Switzerland.

Merging the wealth division would make Credit Suisse simpler and potentially pave the way for cost cuts.It would also rein in local bankers who have enjoyed much autonomy, making them more answerable to senior managers who have often been blindsided by the risks that triggered past scandals, the sources said.

One of the people told Reuters that managers at the bank’s headquarters had become very risk averse and they did not want to give leeway to local bankers, regardless of how much profit they were making. A spokesman for Credit Suisse declined to comment.

Credit Suisse’s financial humiliation stands in stark contrast to its cross-town rival UBS (UBSG.S). In the wake of massive losses and a bailout during the financial crisis, UBS successfully pivoted away from investment banking to wealth management and is now the world’s largest wealth manager with $3.2 trillion in invested assets.

Its shares have climbed 57% in the past 10 years while Credit Suisse has slumped 53% over the same period.Shareholders have deserted Credit Suisse this year following the slew of bad headlines. Its shares are down 12% while UBS is up 36% while Wall Street rivals are riding high on the back of a boom in equity trading and M&A.

Andreas Venditti, an analyst at Swiss private bank Vontobel, said it would take more than “minor changes and a new divisional set-up” at Credit Suisse to reverse the trend.The expected revamp at Credit Suisse has also encouraged some high-profile dealmakers to approach the bank’s senior management to suggest it merges with a rival, another person with knowledge of the matter said.

Those ideas have been rejected so far, however, the person said. Nonetheless, the prospect of a challenge by investors demanding the break-up of the bank, or that its shrinking market value makes it a target for a hostile foreign takeover, have long troubled managers, sources told Reuters earlier this year.

‘WARNING SIGNALS’

With a market value of $28 billion, Credit Suisse is worth less than half of UBS and a fraction of Wall Street giants such as JPMorgan (JPM.N) weighing in at half a trillion dollars. But an approach from the United States would not go down well in Switzerland. Relations between Swiss banks and Washington were damaged when the United States pressured them into giving up their strict secrecy code more than a decade ago.

A combination of Credit Suisse and UBS, which has been touted as an alternative alliance, would face its own problems. For one, it would dominate the Swiss market. Another source said that while Credit Suisse had examined a sale or spin-off of its asset management business, that had been shelved. The person said, however, that once further efforts were made to cut costs and boost growth, a sale, or listing of the business on the market, could be back on the cards.

The bank’s drive to centralize its operations is drawing on lessons from some of its recent failures, including Archegos. Earlier this year, Credit Suisse published a report blaming a focus on maximizing short-term profits and enabling “voracious risk-taking” by Archegos for failing to steer the bank away from catastrophe.

Despite long-running discussions about Archegos – by far the bank’s largest hedge fund client – Credit Suisse’s top management were apparently unaware of the risks it was taking.

The bank’s chief risk officer and the head of its investment bank recall hearing about it first only on the eve of the fund’s collapse. “There were numerous warning signals,” the report said. “Yet the business … failed to heed these signs.”

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Source: Credit Suisse to tighten the reins after string of scandals | Reuters

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Related Contents:

B. H. Meyer; Hans Dietler (1899). “The Regulation and Nationalization of the Swiss Railways

Hill, Kelly (1999). Cases in Corporate Acquisitions, Buyouts, Mergers, and Takeovers. Gale. ISBN 0-7876-3894-3.

Atkinson, Mark (4 August 2000). “Swiss banks agree $1.25bn Holocaust deal”. The Guardian

Grant, Linda (19 August 1996). “Will CS First Boston Ever Win?”. Fortune. pp. 30–34. Archived from the original

Strom, Stephanie (30 July 1999). “Japan Revokes Credit Suisse Unit’s Banking License”. The New York Times.

Kandell, Jonathan (March 2012). “Swiss Banks Adjusting To Radical New Regulations”. Institutional Investor. Vol. 46 no. 2. p. 33.

Crawford, David (8 November 2012). “Germany Probes UBS Staff on Tax-Evasion Allegations”. The Wall

Owen Walker (30 July 2020). “Credit Suisse launches restructuring after trading profit boost

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