Strong Fundamentals Continue to Drive US M&A in the First Half of 2017 According to a New Report by White & Case and Mergermarket
Global law firm White & Case LLP and M&A data provider Mergermarket today released a new report, Forging ahead: US M&A H1 2017. The number of deals in the US dipped slightly in H1 2017; however, economic factors and strong fundamentals are keeping M&A activity at a steady pace.
"Despite uncertainty in the marketplace, US M&A has remained steady in the first half of 2017," says John Reiss, the Global Head of White & Case's Mergers & Acquisitions Practice. "Low interest rates, steady economic growth and a strong stock market have provided a favorable macro-economic backdrop for M&A."
Although M&A activity has been steady, the market has thrown up unprecedented challenges for dealmakers to navigate. Inbound activity from China, one of the most active M&A investors in the US in recent years, has fallen sharply so far this year due to a combination of protectionist leanings in the US and tighter outbound M&A regulation in China. Importantly, the macro-uncertainty created by the difficulties facing the Trump administration is causing some acquirers to pause.
Report highlights include:
- In the first six months of 2017, there were 2,413 deals, an 8 percent drop from the 2,631 recorded in H1 2016
- Value was up, albeit by a small margin, edging 0.5 percent ahead of the US$585.4 billion in H1 2016 to US$588.5 billion in the first six months of 2017
- Inbound activity fared a little better, buoyed by activity in the consumer sector, with a deal value of US$209.7 billion for the first half of 2017, up 26 percent on the same period in 2016. US dealmakers remain confident acquirers overseas, announcing 592 deals worth US$202.5 billion in the first half of the year, overtaking all half-year value totals on record despite volume dropping 6 percent year-on-year
Following a number of megadeals, the consumer sector delivered its highest half-year value figure on Mergermarket record. With 222 deals worth US$132.9 billion, the consumer sector was also the most active sector by value during the period.
Additional sector highlights include:
- Energy, mining & utilities took second place in terms of busiest sector, with US$118.1 billion spent across 189 deals, followed by pharma, medical & biotech, with 244 deals worth US$98.2 billion
- Technology, media and telecommunications generated the highest number of deals (527), despite deal value dropping by 26 percent compared to H1 2016
In terms of an outlook, the report notes some important factors that will set the tone for an increase in M&A activity for the rest of 2017, including: companies continuing to keep pace with technological change, President Trump's ability to implement tax reform and increase infrastructure spending, an increase in inbound M&A—especially from China—and companies adopting more measures to fight cybercrime.
The report uses Mergermarket data to highlight the trends that are shaping the M&A industry. The entire report can be viewed by clicking here.
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