"The Stars are Aligning for M&A in 2018"
Submitted by Mergermarket, a partner of the M&A Leadership Council
Mergermarket, an Acuris company, has released its Global M&A roundup for the first half (H1) of 2018, including its financial advisors league tables, and it continues to be promising! The momentum seen in Q1 2018 has carried over into the second quarter, pushing global M&A to its highest post-crisis value on Mergermarket record with US$ 1.94tn (8,560 deals) announced so far.
Take a look at the report HERE and don’t forget to review the charts breaking down the activity by sector, value, year-to-year analysis, etc.
A couple key findings include:
- Q2 (US$ 1.01tn) became the most active quarter since Q4 2016 (US$ 1.03tn) by value, breaching the US$ 1tn mark for only the fourth quarter since the crisis. A buoyant M&A market has led to six deals above the US$ 20bn mark announced in Q2 including Takeda’s proposed US$ 79.7bn takeover of Shire – the year’s largest deal so far. It appears that the stars are aligning for M&A in 2018. Financing remains cheap while tech innovation is causing traditional corporates to fight back against newer, more innovative firms and shareholder pressure is leading to more spin-offs, divestment programs, and transformational, sector-altering acquisitions
- With dealmakers now having to contend with a greater level of political intervention and protectionism, the majority of the increase in global M&A has been driven by domestic M&A. YTD deals conducted domestically this year have surpassed US$ 1tn for only the third time on Mergermarket record with US$ 1.12tn announced so far. The introduction of tariffs, the growing threat of trade wars and greater scrutiny over deals may be somewhat responsible for a drop in the impact of cross-border M&A. Earlier this year President Trump ensured that Qualcomm’s pursuit of Broadcom did not take off and in the first six months of the year, only 38.2% of the global M&A value was generated by cross-border activity – almost a six percentage-point drop compared to H1 2017. Six of the largest ten deals in H1 2018 were domestic deals, including T-Mobile’s US$ 58.9bn takeover of Sprint, announced in late May. With governments around the world looking increasingly insular, this wave of domestic M&A may be a sign of further things to come in the second half of the year and beyond
- As growing tensions over tariffs and a trade war dominated the news, dealmakers continued to embrace the hunt for prime assets in the first half of 2018. In H1 2018, US M&A deal value rose by 15.9% to US$ 807.9bn from US$ 697.1bn recorded in H2 2017 and by 31.1% from US$ 616.3bn recorded in H1 2017. However, total deal count fell by 247 transactions compared to H2 2017 (2,840) and by 293 transactions compared to H1 2017 (2,886). Various established industry giants, under fire from disruptors Amazon and Netflix, continued to demonstrate a willingness to pay high prices for the most valuable targets on the market. As a result, the average value for disclosed deals in the first half of the year jumped 51.4% to US$ 736.7m from US$ 486.5m in H1 2017, and 24.8% from US$ 590.2m in H2 2017
