Buy global: the US goes shopping

Data InsightDealspeak 31 August

Buy global: the US goes shopping

Fueled by a roaring stock market, government stimulus and cheap debt, US-based buyers have gone on a shopping spree like never before, ratcheting up an extraordinary USD 2tn in announced deals so far this year.

Domestic deals have totaled USD 1.65tn so far this year, up 32% on the whole of last year. More interestingly, American company executives, private equity professionals and founders of special purpose acquisition companies (SPACs) are increasingly looking for deals abroad, announcing USD 355bn in outbound deals YTD 2021, up 53% from FY20 and shattering FY15’s record of USD 240bn.

US buyers are using their record public market valuations to finance deals with their own stock but are also turning abroad because too much capital is chasing too few opportunities at home.

Shop ’til you drop

Technology attracted 37% (USD 749bn) of US wallet spend, up from 25% in pre-COVID’s 2019 as the world adjusted to a life led mostly online.

Financial buyers – including PE firms and SPACs – accounted for about 54% of all buy-side appetite – showing their intent to put record levels of dry powder to work, but also raising concerns of market frothiness.

One trailblazing financial buyer is Thomas Bravo, which focuses on buying software companies. The PE shop has splurged like never before, this year buying the likes of Medallia, and Proofpoint at home, and creating its own SPAC to buy Israel’s ironSource abroad.

Israeli, Singaporean and Australian hot spots

Almost two-thirds of US outbound activity this year has gone to buying companies in Europe, the Middle East and Africa (EMEA) – the region attracted a record USD 231bn from American suitors YTD 2021, up 23% from FY2020. Meanwhile, Asia Pacific attracted USD 94bn in deals involving American buyers, an almost fourfold increase.  

The UK continues to dominate American buyers’ attention, but Singapore, Israel, Australia and Germany also are offering attractive buying opportunities.  

Online food delivery and payment technologies are particular areas of interest for US buyers – evidenced by the top two outbound deals: US blank check company Altimeter Growth’s [NASDAQ: AGC] proposed USD 34.7bn merger with Singapore-based ride hailing and food delivery giant Grab and Square’s [NYSE: SQ] USD 29bn acquisition of Australian buy-now-pay-later company Afterpay.

Who’s next? 

With more than four months left in the year and markets still surging, who will be next? Zoom Video Communications [NASDAQ:ZM], which last month announced a USD 15.9bn deal for cloud contact center Five9, has talked about investing further in healthcare communications.  Roper Technologies [NYSE:ROP], a diversified industrial group, expects to return to the deal-making table later this year after deleveraging its balance sheet. DoorDash [NYSE:DASH] and Amazon [NASDAQ:AMZN] both are looking making acquisitions in Europe’s grocery delivery sector.  The world is corporate America’s oyster.

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