The Underlying Drivers of M&A Activity Remain Strong According to a New Report by White & Case and Mergermarket
Global law firm White & Case LLP and Mergermarket today released a new report, Slow but steady: US M&A H1 2016. The report provides a comprehensive analysis of the M&A market in the first half of 2016. Although deal value and volume were down following two blockbuster years, the underlying drivers of M&A activity remain strong. The entire report, which takes an in-depth look at private equity, pharma, power and fintech M&A, can be viewed by clicking here.
"While we've seen value and volume down this year compared to 2014 and 2015, if you compare it to post-crisis years, it actually remained fairly robust," said John Reiss, global head of M&A at White & Case. "The broader macro-economic backdrop remains attractive," he added.
According to the report, there were 2,291 deals recorded in the first six months of 2016—far ahead of the 1,824 deals recorded in the first half of 2013.
"Despite the downward trend, we were incredibly busy in the first half of 2016, even if that seems contrary to what the data suggests," noted Reiss.
Driving much of the action during the first half of 2016 is the technology, media and telecommunications (TMT) sector, which continues to dominate deal flow in terms of volume—with 495 deals accounting for 22 percent of all transactions. Industrials and Chemicals was the second busiest sector in terms of volume—with 372 deals.
Looking ahead, the UK's decision to exit the European Union (Brexit) ensures that economic uncertainty will continue in Europe, while the pending US Presidential election in November may also impact the market.
Other key findings of the report include:
- The UK came in number two in inbound deals in H1. Total UK inbound deal values reached US$5.9 billion, with 67 separate deals. Inbound Asia deals also remain a key part of the story, with China ranking third, racking up US$27.5 billion in deal value in H1.
- The number of private equity buyouts declined 8.4 percent in H1 2016 year-on-year, though deal values increased slightly from US$62.8 billion to US$74.2 billion. The decline in private equity exits was slightly less pronounced, with just 423 deals in the first half of 2016, compared with 448 in the earlier part of the year. However, exit values dropped 11 percent to US$99.7 billion.
- Overall US M&A deal volumes were down 11 percent year-on-year, from 2,585 in H1 2015 to 2,291 in H1 2016. Values showed an even sharper decline, down 30 percent from US$822 billion in H1 2015 to US$577.2 billion in H1 2016.
Using Mergermarket data, Slow but steady: US M&A H1 2016 highlights the key factors and trends driving dealmaking in the United States, with a focus on key sectors and private equity activity, as well as a spotlight on the US fintech sector.
Mergermarket, part of The Mergermarket Group, is an unparalleled, independent M&A intelligence tool used by the world's foremost financial institutions to originate deals. It provides proprietary intelligence on potential deal flow, potential mandates and valuations via the world's largest group of M&A journalists and analysts who have direct access to the most senior decision-makers and corporates. The Mergermarket Group has over 450 employees worldwide and regional head offices in New York, London and Hong Kong. Visit us at www.mergermarket.com.
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