The signs are positive for another strong year in global deal-making, but it will be hard to recreate the dizzying heights of 2021.

The fourth quarter of 2021 was the sixth consecutive quarter where global mergers and acquisition (M&A) activity hit more than $1tn; and for full-year 2021, it reached $5.9tn. By far and away a record-breaking amount.

The word “unprecedented” has been used frequently in recent years, but here is it hard to find adequate terms to sum up the seemingly perfect storm of factors that has led to remarkable levels of global deal-making. This is not a story of a handful of megadeals, or a surge in one particular region or industry area; activity has been up across the market.

Equally extraordinary is that this has taken place against the backdrop of a global pandemic, which has prevented travel or face-to-face meetings for much of the past 24 months. Some have even gone as far as to observe that more remote working has enabled a greater efficiency and, therefore, more deals to be done. This is perhaps less true for more complex deals, and many are craving the return of more face-to-face interactions.

No M&A banker is foolish enough to expect this set of circumstances to persist long term. And there is some nervousness about being too bullish for 2022’s prospects given how strong a year 2021 was. On the horizon are inflation worries, central bank tapering, the possibility of equity market stumbles and no one can completely rule out further Covid-19-related market jitters, along with the ever-present danger of some unforeseen event or crisis throwing things up in the air (the same way the outbreak of the pandemic initially did two years ago).

On the other hand, it is hard to be too pessimistic given that bankers report fuller M&A pipelines than at this time last year, and there remains a wall of capital sitting with private equity funds, special purpose acquisition companies and on corporate balance sheets. Broader strategic shifts, where corporates are facing pressure to digitalise rapidly and businesses, notably large conglomerates, are under pressure to demonstrate their fitness for the future, are also likely to continue driving deals. Whisper it for now, but 2022 may yet be another vintage year for deal-making.

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