US M&A is Weathering Geopolitical Storms as Domestic Deals Drive the Market According to a New Report by White & Case and Mergermarket
The US M&A market delivered another year of strong performance in 2018—and M&A executives are optimistic about 2019, according to a new report: Peak Performance: US M&A in 2018 by global law firm White & Case LLP and M&A data provider Mergermarket.
The report notes that 2018 M&A activity was strong, especially domestically, with all of the ten largest US transactions recorded over the period being domestic deals; domestic deal value climbed 23 percent year-on-year to US$1.2 trillion. Overall, US deal value rose 15 percent to US$1.5 trillion; volume dipped 2 percent to 5,682 deals.
"Thanks to a strong stock market and tax reform, domestic deals were booming in 2018," says John Reiss, Global Head of M&A at White & Case. "However, a strong market cannot last forever, nor can a booming M&A market. 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 concerned about the potential impact of geopolitical events," he added.
However, despite these geopolitical concerns, in a survey of 200 M&A executives conducted for the 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.
More than half of survey respondents expressed their opposition to new laws that give 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.
"Dealmakers should 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," Reiss says. "However, as we continue into 2019, there will be much for dealmakers to look forward to. Technology continues to transform the business landscape, driving transactions, and the economy is currently in good shape, which will sustain confidence."
Sector highlights include:
- 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.
- Technology deal value in 2018 rose 89 percent year-on-year to reach US$217.2 billion
- Energy, mining and utilities saw a 34 percent increase in deal value, to US$350.1 billion in 2018
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