Recently, a boom in small-scale mergers and acquisitions (M&A) worth billions of dollars has emerged. This contrasts with the dampened expectations for large M&A due to the tariff war of Donald Trump’s second administration. Earlier, Goldman Sachs lowered its outlook for transactions expected to be completed this year from 25% to 7%.
On the 31st of last month (local time), The Wall Street Journal (WSJ) reported, “While mega-deals generating massive fees remain rare, relatively small M&A worth billions of dollars continues steadily,” adding, “In particular, M&A activity outside the U.S. in Europe and Asia has become much more active than last year.”
According to data from the London Stock Exchange Group (LSEG), M&A transactions worth $1 billion to $10 billion (approximately 1.5 trillion won to 14.7 trillion won) increased by 38% compared to the previous year as of the 28th of last month, and the number of transactions also rose by 31%. This is the most active level seen since the COVID-19 pandemic era in 2021.
The reason small-scale M&A is active is that it faces relatively less scrutiny from antitrust regulators, and funding is also easier. The WSJ noted that while corporations are cautious about spending massive cash amounts, investment banks and lawyers are showing a more flexible attitude toward small transactions.
A representative small-scale M&A deal occurred last month when PepsiCo acquired the prebiotic carbonated drink brand Poppi for approximately $1.6 billion (around 2.3 trillion won). In the same month, the American mortgage company Rocket Companies also acquired the online real estate brokerage Redfin for $1.75 billion (around 2.6 trillion won).
Notably, M&A activity is more vigorous outside the U.S. According to LSEG, the global M&A transaction volume in the first quarter of this year increased by 3.9% compared to the previous year. Among this, the transaction amount in the U.S. decreased by 18% compared to the previous year. In contrast, M&A transactions in Europe and the Asia-Pacific region increased by 8.4% and 5.2%, respectively.
Michael O’Bryan, an M&A partner at the U.S. law firm Morrison & Foerster, stated, “While there are many changes globally, other regions are less volatile than the U.S.,” adding that the strong dollar phenomenon may encourage U.S. corporations to make overseas acquisitions.
In particular, M&A activity in the technology sector has been active this year. Google’s acquisition of the cloud security startup Wiz for $30 billion (approximately 44 trillion won) is a notable example. Additionally, SoftBank Group acquired the U.S. semiconductor design firm Ampere Computing, while private equity firm Turn/River Capital acquired the enterprise software (SW) company SolarWinds.
The WSJ noted, “Smaller-scale transactions are increasing, and M&A activity is becoming more active in the pharmaceutical sector,” reporting that Eli Lilly, Sanofi, and AstraZeneca have each announced acquisition agreements worth billions of dollars to secure new drugs.