Home Knowledge Taxand: Strong M&A activity forecast for H2 after fast start to 2021

Taxand: Strong M&A activity forecast for H2 after fast start to 2021


Taxand’s 2021 Guide provides commentary and insights into the tax treatment of global M&A deals.

Taxand, the world’s largest organisation of independent tax advisory firms, has published its 2021 Global Guide to M&A Tax providing insights into the tax treatment of mergers and acquisitions across 30 countries, including commentary with respect to recent developments and Covid measures relevant to deals. As Ireland’s member firm of Taxand, William Fry LLP provides its clients with exclusive access to Taxand’s network of more than 550 tax partners and over 2,500 advisors in 50 countries.

The 2021 Global Guide to M&A Tax predicts significant M&A activity momentum in 2021:

  • Global M&A in Q1 2021 increased 71% YoY
  • End of H2 saw high M&A activity with more than $533bn worth of deals in May ($2.4trn for first five months of H2)
  • Dealmakers have predicted a 6% 2021 increase in M&A on 2020  

Sonya Manzor, Head of Tax, said: “Despite the volatile economic climate in the last 18 months, the Irish M&A market’s performance in 2020 was very strong, matching 2019 deal activity by volume and exceeding it by value by 14%. Increased private equity activity in the Irish market was a notable trend in 2020. 13 of the top 20 deals of the year had PE involvement – an impressive performance given the challenges dealmakers faced in 2020. As dealmakers plan for the second half of 2021, there are signs that the era of extreme uncertainty is drawing to a much needed close. The gradual global economic recovery from the COVID-19 crisis, coupled with greater geopolitical stability in the form of the UK-EU trade deal, has provided the backdrop for an even more confident Irish M&A market moving through 2021.”

This year’s Global Guide states that the first half of 2021 was record breaking, with more deal volume and announcements than any previous H1 on record. There are several factors for such heightened activity: historically low interest rates; pent up deal demand from a global pandemic lockdown; PE dry powder in excess of $1.6 trillion (and corporate cash at record levels); US elections being out of the way; taking advantage of post-pandemic opportunistic plays in areas such as technology, media, and health-care; and accelerating deal activity due to the Biden administration’s tax raising goals.

Frederic Donnedieu de Vabres, Chairman of Taxand, said:  “Despite all the challenges posed by a tumultuous 18 months, dealmakers can be optimistic heading into H2. After the strongest M&A performance in 5 years in Q4 2020, we have continued to see impressive levels of transaction activity in H1 2021. These figures will undoubtedly reinforce market confidence that the combination of economic stimulus measures, Private Equity “dry powder” and the increase in momentum of Covid vaccinations, to name a few key factors, are fostering not only stability, but are encouraging sustained transaction volumes.

“Government measures to support businesses and manage the challenges posed by the pandemic have had an impact on the M&A market and the world of tax, and following the G20 meetings in Vienna, we await with interest the outcome of the so called “Made in America” plans, including the proposed global minimum tax. As a business owner and a tax practitioner I hope for further clarity from the ongoing international discussions. It remains to be seen whether the M&A market can sustain its current positive momentum through to the end of 2021 and beyond, but in a changing environment it’s important for businesses to be able to adapt and evolve in order to grow. At Taxand we apply our expertise to partner with our clients with this in mind, and I am delighted we are able to produce and share reference Guides such as this which provide insights on current rules and useful updates on recent changes.”