Eighty-seven data center M&A deals worth $24 billion closed in the first half of 2022, with another $18 billion worth expected to close this year, according to new data from Synergy Research Group (SRG).

Last year's data center M&A market broke records with a total aggregate value of more than $48 billion, according to SRG. That marked a 41% jump from 2020's $34 billion value — which was also considered a record-toppling year.

And 2022 is on track to continue this trend and break the previous year's record. "After adding in the regular flow of transactions that happen with little advance public notice, 2022 is shaping up to match the record-breaking M&A activity levels that were seen last year," SRG concluded.

Key deals this year so far include investment firms KKR and Global Investment Partners' acquisition of data center provider CyrusOne and DigitalBridge's pending deal to buy Switch for $11 billion. In 2021, some of the biggest M&A deals were the acquisitions of CoreSite and QTS, which were both sold for about $10 billion, according to the market research firm.

SRG cites these four deals as the most expensive valuations the industry has ever seen and notes Equinix, Digital Realty, CyrusOne, and NTT, among others, as serial acquirers in the space.

The cloud and data center industries are exploding in tandem, but external challenges like geopolitical tension and ongoing supply chain disruption are driving more funding from private resources, according to analysts.

“There is an ever-increasing demand for data center capacity, driven by rapidly growing cloud markets, aggressive expansion of hyperscale operator networks, and continued growth of data-rich digital services,” SRG Chief Analyst John Dinsdale said in a statement.

In a similar vein, Dell'Oro Group recently reported data center capex grew at its fastest rate in three years during the first quarter of 2022. However, the analyst firm noted emergent pockets of lower cloud services demand and greater chances of stunted economic growth could threaten the industry’s momentum.

SRG reported that in the first half of 2022, private equity accounted for 90% of the total data center M&A deal value. This represents a major increase in private equity funding over recent years. According to SRG, private equity buyers represented 42% of all data center M&A deal value from 2015-2018. And as data center M&A activity boomed overall from 2019-2021, private equity represented 62% of the total deal value.

“The trouble is that building and operating large fleets of data centers is highly capital intensive. Even the biggest data center operators have had to seek external funding to allow them to meet growth targets while protecting their balance sheets. As the level of resulting M&A activity has shot through the roof, virtually all of the incremental investment has come from private equity," Dinsdale explained.