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After a slump in 2020 largely due to the COVID pandemic, mergers and acquisitions in Texas in 2021 hit record highs, both in number and value.
Energy, technology and manufacturing companies led the wave of M&A activity last year. And M&A experts say they expect the same for 2022.
Texas lawyers worked on 929 corporate mergers and acquisitions in 2021, up 53% from 2020, according to new exclusive data from The Texas Lawbook’s Corporate Deal Tracker.
The data shows that business transactions in 2021 were 32% higher than the 704 transactions in 2019, which was a record year.
The price of these transactions has also reached record highs.
The value of mergers and acquisitions in 2021 exceeded $601.7 billion, a 133% increase from $258 billion in 2020, according to data from Deal Tracker. Total transaction value in 2021 was 83% higher than in 2019.
Brittany Sakowitz, a partner at Kirkland & Ellis in Houston, said mega-deals and opportunistic or restructuring-focused deals have reached “full volume” across most industries, sizes and deal structures.
“Many predicted that deals would increase in 2021, but the pace of deals closing has far exceeded even the wildest expectations,” she said. “Deal activity was boosted by pent-up demand from private equity, the strength of the public market, an abundance of cheap funding, substantial liquidity, confident boardrooms and dovish Fed policies.”
At the end of 2020, with COVID in full swing, there was a lot of uncertainty, said Eric Otness, a Skadden partner in Houston, but as oil and natural gas prices started to climb with demand worldwide, deals started rolling in 2021.
“It was hard to anticipate how busy it would become in 2021, but private equity activity and strategic consolidation fueled a boom in 2021,” he said.
In addition to the $601.7 billion value attached to the 2021 deals, 401 deals were confidential and the price was kept secret.
Among the Corporate Deal Tracker statistics, four highlight the importance of the M&A market in Texas last year:
• Texas dealmakers worked on more mergers, acquisitions and joint ventures each month of 2021 than they did in the same months a year earlier.
• There were 115 transactions handled by law firms in Texas worth $1 billion or more, compared to 64 in 2020 and 66 in 2019.
• Of the 929 deals in 2021, 105 had prices between $500 million and $999 million, more than double the 51 in that range a year earlier.
• The number of transactions handled by Texas lawyers worth $250 million to $499 million also doubled last year, from 53 to 107 in 2020.
Janice Davis, a partner at Morgan Lewis in Dallas, said 2021 was the busiest M&A season she’s had in her more than 30-year career.
“It was exhilarating,” she said.
Sector breakdown
M&A activity in the healthcare sector continues to be strong, particularly with the purchase of physician groups by private equity firms and the consolidation of certain healthcare businesses, such as palliative care and home care, groups of orthopedic physicians and dermatologists, groups of dental practices and orthodontists, Davis mentioned.
The health and wellness sector and technology-focused companies with scalable business models have seen high activity, according to Tom Woolsey, partner at Greenberg Traurig in Dallas.
Corporate Deal Tracker data shows Texas negotiators worked on 33 healthcare-related deals in 2021, down from 15 in 2020 and 11 in 2019.
Lawyers say they have also seen more deals in the retail and consumer products sectors in 2021.
“Consumer products in particular had a historic year of business activity,” said Katy Lukaszewski, partner in Sidley’s Houston office. “We’ve seen renewed interest from strategists to incorporate innovative in-house brands into their brand portfolios, as well as continued interest from private equity firms with a focus on skincare. “
Technology transactions also exploded last year, according to data from Data Tracker. Texas lawyers handled 132 transactions in the tech industry in 2021, a 53% increase from 2020 and a fourfold increase in 2019.
Manufacturing contracts increased by 88%. Deals involving business services firms rose to 45 last year, from nine in 2020. Mergers in the construction sector jumped 400% year-on-year, the data showed.
The number of transactions in just one industry, financial services, including banking, fell significantly last year, according to CDT data. There were 30 transactions involving financial services compared to 42 in 2020.
The energy sector continued to dominate M&A deals. In 2021, Texas negotiators reached 328 energy deals, a 25% jump from the previous year.
On the oil and gas front, there has been a lot of activity in the oil services and midstream segments, according to Steve Gill, a partner at Vinson & Elkins who was recently named co-head of the M&A and markets practice group. of company capital.
“We saw a drop in upstream transactions, but that doesn’t mean people weren’t talking,” he said. “The general – albeit choppy and volatile – rise in commodity prices likely played a role in upstream trading as stock prices rose above what buyers considered reasonable premiums.”
But Gill has also seen a dramatic increase in energy transition and digital infrastructure contracts.
“For our business in particular, we completed five times more energy transition contracts in 2021 than in 2018 and doubled digital infrastructure contracts,” he said.
