The global market for mergers and acquisitions (M&A) and capital raising enjoyed its biggest boom in a decade in the first half of this year, buoyed by the frenzy of investment in artificial intelligence (AI).
On the 9th, The New York Times (NYT) reported, citing data from financial data firm Dealogic, that the value of corporate transactions worldwide in the first half of this year — including global M&A, initial public offerings (IPOs) and private capital raising — reached $3.2 trillion (about 4,838 trillion won), up 45% from a year earlier and marking the highest half-year figure in the past 10 years.
Mega-deals are seen as having driven the boom. There were 44 transactions worth $10 billion or more, including corporate acquisitions and the raising of large private equity funds (PEFs), but the total number of deals fell 1% from last year. This is because small and medium-sized companies, unable to cope with geopolitical uncertainty and financing conditions, maintained a wait-and-see stance, while deals by large corporations became active. The open regulatory environment of the Donald Trump administration in the United States also spurred large deals. Matt McClure, co-head of Goldman Sachs' global investment banking division, said, "Companies are currently viewing this period as a window of opportunity to fundamentally change their business structures."
In this respect, this year's expansion in deals differs in character from the low-interest-rate period of COVID-19, the 2007 boom in leveraged buyouts (LBOs, a method of financing an acquisition using the assets of the acquired company as collateral), and the dot-com bubble of the 1990s, the NYT reported. This is because the companies leading this year's M&A frenzy are among the world's largest and are seeking to achieve economies of scale through large deals. Representative examples are NextEra's $118 billion (about 178 trillion won) acquisition of Dominion Energy and SpaceX's $60 billion (90 trillion won) acquisition of AI coding startup "Cursor."
As a result, major investment banks arranging the deals are benefiting, but the private equity industry is struggling to recoup investments as the emergence of AI has made it difficult to value existing software companies. In the United States, the IPO market also reached $155 billion, the largest since 2021, but many companies are posting weaker-than-expected performances, such as SpaceX, which has fallen below its early post-listing peak. According to Renaissance Capital, an investment advisory firm, about one-third of companies that listed in the second quarter are currently trading below their offering price.
