Never in the past ten years have companies in the Swiss M&A market conducted as many mergers and acquisitions as in 2021. Telecommunications and Technology exhibited the greatest momentum followed by Industrial Markets as well as Pharmaceuticals and Life Sciences. According to the insights offered by the latest M&A study from KPMG, the biggest deal involved an amount of around USD 21 billion. 

While the number of transactions with Swiss involvement nearly doubled year over year from 363 to 604, the transaction volume nearly tripled from USD 63 billion to USD 170 billion. Low interest rates, a high level of market liquidity and positive market sentiment have all contributed to this extremely dynamic situation. One factor that stands out again this year is the enormous significance of private equity firms, which were involved in one out of every three transactions. 

Biggest transactions in Pharmaceuticals and Life Sciences

Four of last year's ten largest transactions came from the Pharmaceuticals and Life Sciences sector. The transaction volume in this sector increased by a factor of more than nine: from USD 6 billion to USD 56 billion. Novartis' sale of its Roche shares back to Roche for around USD 21 billion accounts for a particularly large portion of this and is simultaneously the largest deal of the past year. There was also a substantial year-over-year increase in the number of deals conducted – from 42 to 87 mergers and acquisitions. 

"We have seen a consistent pursuit of innovation within the Pharmaceuticals and Life Sciences industry over the past two years and we expect this to continue this year with solid funding. Mergers, acquisitions and partnerships which enable tapping into such innovation, for example through new technologies, will be much sought after," explains Roger van den Heuvel, Life Sciences Expert at KPMG. 

Figure: Ten largest transactions with Swiss involvement in 2021 (click here to open)

Highest activity level seen in the Technology sector, followed by Industrial Markets

Increasing digitalization is also impacting the merger and acquisition business: Of the 604 mergers and acquisitions that took place in the past year, 105 were attributable to the TMT sector (Technology, Media and Telecommunications) where the deals came to a total of around USD 20 billion. The TMT sector was followed by the Industrial Markets sector with 100 deals and a volume of around USD 10 billion as well as the Pharmaceuticals and Life Sciences sector with 87 deals and a total value of USD 56 billion.

Acquisitions by Swiss companies considerably higher than by foreign companies

Contrary to the popular opinion that Swiss companies are being increasingly bought up by foreign companies, the data paint a different picture: Swiss companies acquired foreign companies or parts of companies in 279 cases (46 percent of all transactions), whereas foreign companies acquired Swiss companies in 141 cases (23 percent of the transactions). At 112 deals, domestic transactions (Swiss/Swiss) accounted for almost one fifth of all transactions. Some 12 percent of all transactions were attributable to foreign deals with Swiss vendors (72 deals).

Virtual support also extremely effective in the M&A business

"Whereas numerous deals were still being put on hold during the first year of the pandemic, in part due to ongoing pandemic restrictions, it's now easily possible to conduct individual steps or even entire transactions virtually – in fact, that’s pretty much become the new normal," explains Timo Knak, Head of Mergers & Acquisitions at KPMG. "Despite all that, people still prefer on-site tours and personal meetings between the parties involved."

Outlook

Knak expects 2022 to be a busy year for mergers and acquisitions. Even last year, the potential for new coronavirus variants as well as supply chain problems were unable to diminish the fundamentally positive investor sentiment. The extent to which rising inflation might put a damper on the M&A business remains to be seen. "Right now we’re not experiencing any sort of slowdown; our order books are still very full," reports Knak.

Further information, as well as the full study, can be found here: 

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