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Peak performance: US M&A in 2018

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2018 was a strong year for dealmaking in the US, particularly domestically, but when will the tide turn?

US M&A weathers geopolitical storms

The political and economic backdrop may be unstable, but 2018 was a strong year for US M&A, especially domestically. However, a strong stock market cannot last forever, nor can a booming M&A market

US M&A enjoyed yet another busy 12 months in 2018. Deal value climbed by 15 percent and the domestic M&A market thrived. Overall domestic deal value was up 23 percent compared to 2017, and the ten largest deals of the year were all domestic transactions.

Steady economic growth, low unemployment and interest rates, and the billions of dollars released through the Trump tax cuts all boosted domestic dealmaking. In a survey of 200 M&A executives conducted for this report, more than three quarters see the US as the most attractive M&A market in 2019, and 80 percent expect the US economy to continue expanding over the next year.

But while there is plenty of reason to be optimistic, the positive deal and economic figures can obscure growing concerns that the cycle may be close to its peak. Stock markets have been more volatile this year and businesses are worried about the impact of the Trump administration’s actions.

More than half of respondents to the survey expressed their opposition to new laws that give the Committee on Foreign Investment in the United States (CFIUS) more powers to block inbound deals, and a third say they are worried about what escalating trade tensions between the US and China mean for their prospects. In what is supposed to be a strong seller’s market, the fact that close to a third of those we surveyed have suffered lapsed deals is further cause for caution.

As we go into 2019, there will be much for dealmakers to look forward to. Technology continues to transform the way businesses operate and will remain a reason to transact. The economy is still in good shape too, which will sustain confidence.

Dealmakers will not feel the need to sit on their hands just yet but will need to approach prospective deals with a degree of caution over the next 12 months to mitigate against the inevitable recession and stock market pullback.


Confidence, cash and tax cuts: The US M&A landscape in 2018

The US M&A market delivered another year of strong performance in 2018.

Private equity remains strong in 2018

Private equity buyout activity saw an increase in 2018, with volume rising 6 percent to 1,361 deals and value up 7 percent to US$214 billion.

US M&A survey: Deal drivers and dilemmas

We surveyed 200 executives on their views about the future of M&A and found that most remain optimistic about 2019

Sector watch

Sectors overview: Tech and energy top the charts

TMT and energy were the top two sectors by value; fintech is poised to invigorate dealmaking in the financial services sector.

Technology M&A value soars in 2018

After a period of frenetic dealmaking in technology over the last few years, which saw businesses across all industries scramble to adjust to the rapid shifts driven by digitalization, 2018 has seen value climb in the tech M&A sector

Consumer deals slip as digital disrupts

Digital disruption and its impact on physical retailers once again weighed on the consumer sector in 2018. Consumer M&A volume was down 13 percent year-on-year to 465 deals in 2018. Value decreased 28 percent to US$119 billion

Financial services deals are down, but 2019 brings hope

Financial services sector M&A volume decreased by 6 percent to 461 deals in 2018, with value decreasing 48 percent to US$80.2 billion. But there are signs that the sector’s M&A market is moving in the right direction going into 2019

Stability in early 2018 fuels oil and gas M&A

A stable oil price (for the majority of 2018) saw deal value climb in the energy, mining and utilities sector in 2018, despite volume falling

Real estate rises higher on megadeal surge

Real estate M&A value jumped 116 percent to US$74.9 billion in 2018, with deal volume staying flat at 46 deals

Next big thing drives healthcare M&A

Although deal volume and value in the pharma, medical and biotech sector fell in 2018, down by 3 percent to 580 deals and 27 percent to US$111.8 billion respectively, pharma companies have invested aggressively in strategic deals throughout the year

In Focus

Deal-changing decisions from Delaware

In the second half of 2018, the Delaware courts once again produced decisions that will guide M&A transactions in the future

Why, how and when should directors engage with shareholders?

Activism among investors is on the rise across the globe. Companies that empower directors to engage with shareholders can optimize investor relations, if they follow some simple but important guidelines


Four trends moving the US M&A needle in 2019

In 2018, the US M&A market has seen marked robust domestic activity and a strong tech sector but declining inbound dealmaking. We examine the four key factors that could characterize 2019

Meet our Partners

Global M&A Leaders

John Reiss

John Reiss
Partner, New York


Gregory Pryor

Gregory Pryor
Partner, New York


Allan Taylor

Darragh Byrne
Partner, Frankfurt, Stockholm


Allan Taylor

Allan Taylor
Partner, London


John Cunningham

John Cunningham
Partner, London


Alexandre Ippolito

Alexandre Ippolito
Partner, Paris


Christopher Kelly

Christopher Kelly
Partner, Hong Kong


 Barrye Wall

Barrye Wall
Partner, Singapore


Stock Market

Financial services deals are down, but 2019 brings hope

Financial services sector M&A volume decreased by 6 percent to 461 deals in 2018, with value decreasing 48 percent to US$80.2 billion. But there are signs that the sector’s M&A market is moving in the right direction going into 2019

3 min read

Congress and the Federal Reserve have moved to ease some of the tough regulation imposed on financial institutions following the financial crisis, and after years spent retrenching to domestic markets and rebuilding balance sheets, banks and insurers are moving back into the black. According to the Federal Deposit Insurance Corp (FDIC), Q3 US bank net income climbed to US$62 billion, a 29.3 percent increase compared to the same period last year.

Percentage decrease in financial services M&A value compared to 2017

As part of the regulatory rollback, the definition for what constitutes a systemically important financial institution (SIFI) was changed from institutions with at least US$50 billion in assets to those with at least US$250 billion. The raising of this threshold eased a major deterrent to banking M&A, especially for mid-size US banks, which, under the previous regulatory regime, had been wary of becoming subject to much more onerous requirements with respect to capital and liquidity.


Back to growth

As lenders have returned to profitability and regulation has rolled back, banks have shifted their focus to growth. Fifth Third Bancorp’s acquisition of Chicago-based MB Financial for US$4.6 billion is its largest deal since 2001 and third-largest ever. The MB Financial deal will increase the bank’s presence in one of its core growth markets. Meanwhile, at the end of January this year, two Midwest banks, Chemical Financial and TCF Financial, joined forces in a deal worth US$3.6 billion. The merger will create one of the biggest banks in the MIdwest region.

In the insurance sector, institutions have also turned to M&A to drive growth. Lincoln National’s purchase of rival insurer Liberty Life Assurance Company of Boston for US$3.3 billion has positioned it as the US’s largest provider in fully insured disability sales with a group benefits business serving some ten million customers.


Further opportunities in fintech

In addition to a rise in M&A involving traditional financial institutions, deal activity in financial services has also been lifted by the emergence of the fintech industry. Concerns around how fintechs will be regulated has given some banks pause when considering fintech deals, but with the likes of Goldman Sachs acquiring personal finance startups like Final and Clarity Money, US financial institutions have accepted that they need to serve the digital needs of customers with new platforms and modern services.

According to CB Insights, 40 of the 50 largest banks in the US made no fintech investments in the five-year period from 2013 to the beginning of 2018. The ten banks that had invested in fintech had made only 18 such deals between them, but five of these deals came in 2017 alone, suggesting that higher volumes of fintech deals could be on the way as banks move to upgrade their platforms.

Fintech allows financial institutions to reduce their costs as well as gain more of their customers’ wallet shares. In addition to helping financial services companies open new distribution channels, fintech can also help back-office functions, such as reducing the risk of identity fraud.

Top financial services deals
FY 2018

1: Invesco acquires OppenheimerFunds for US$5.7 billion

2: Fifth Third Bancorp acquires MB Financial for US$4.6 billion

3: Lincoln National Corporation acquires Liberty Life Assurance Company of Boston for US$3.3 billion



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