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The pace of merger and acquisition activity in 2021 outstripped most everyone’s expectations, continuing a trend that began in 2020.

Through August 2021, the financial services firm UBS reported, there were over $1.8 trillion in mergers and acquisitions in the U.S.

That pace, the firm said, means that 2021 activity is expected to top records set in 2015.

Globally, the numbers are even more skyhigh, with over $4.3 trillion in deals reported through the third quarter — a new record.

The pace is likely to continue, according to M&A bankers and other experts.

“The path to recovery is increasingly clear and people are looking beyond Covid,” Birger Berendes who co-heads M&A at Bank of America, told Reuters. “Investors are flush with cash and want companies to look for acquisitions in areas where they need to grow or add capabilities and services rather than just paying dividends or buying back shares.”

According to Mark Shafir, global co-head of M&A at Citigroup, “the rationale is pretty straightforward — we’re really awash in liquidity. You’ve got an incredibly hospitable fixed-income market in terms of rates and availability. So there’s plenty of opportunity to do deals.”

While deals were rife throughout most industries, they were particularly numerous in the tech and energy sectors.

According to Alan Felder of UBS, among the tailwinds for continued strong M&A activity:

• Low interest rates and government stimulus

• Pent-up supply and demand from both sellers and buyers

• Growing feeling the pandemic is easing and the worst is behind us

• Possible speed-up of exit-planning over uncertainty about capital gains and corporate taxes.

“Companies that performed well over the Covid period are trading at attractive valuation levels and are in demand by buyers. We continue to focus our practice on advising clients on the strategic alternatives available to them. We expect robust M&A and capital markets activity to continue and are focused on helping our clients create long-term value,” said Felder.

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