Global law firm White & Case LLP and M&A data provider Mergermarket today released a new report, Tried and Trusted: US M&A 2017. According to the report, deal activity held steady in 2017 thanks to solid economic fundamentals, strong confidence and record-high stock markets.
"We have had a great year," says John Reiss, Global Head of M&A at White & Case. "In particular, the M&A market had an uptick in November and December, which bodes well for 2018."
Following two blockbuster years, US M&A remained solid in 2017. The total value of US M&A dropped 14.3 percent to US$1.3 trillion year-on-year, but volume increased by 0.4 percent to 5,347 deals.
Putting this into clearer perspective, 2017 value was the third highest since the economic crisis took hold in 2008. Solid economic fundamentals continue to ensure deals were done—interest rates remain low, equity values are at record highs and there is a high degree of confidence within the business community. Overall, the US economy is growing steadily and continues to create jobs.
"There is still confidence, optimism and capital available, so M&A is going to stay busy. The key factor is the stock market. Until the stock market falls back significantly for a long period, we are likely to continue to see substantial M&A activity," Reiss says.
The report notes other important factors that will set the tone for an increase in M&A activity for the rest of 2018—including favorable tax reforms, a vibrant PE sector and the continued convergence between technology and other sectors.
Other highlights from the piece include:
- Outbound deal value increased 20 percent year-on-year to US$340.8 billion
- Inbound deal value dropped 31 percent compared to 2016, yet volume increased 4.7 percent
- US dealmakers dominated the top end of the market, with eight out of the top-ten deals between US-based bidders and targets
- M&A deal value targeting the consumer sector jumped 139 percent year-on-year
- Technology, Media and Telecommunications (TMT) was the most active sector by volume, accounting for 1,213 deals, up 4.1 percent compared to 2016
A dip in value for US inbound M&A could be attributed to geopolitical factors, including the impact of antitrust and CFIUS interventions on big-ticket transactions, as well as limitations on Chinese outbound activity.
"China has been an important player in US M&A in recent years, but multiple overlapping factors both in China and in the US have had a material impact on outbound activity," Reiss says.
As part of this report, we conducted an exclusive survey of 200 senior-level executives about their experiences and outlook on M&A in the US. Some of the key findings include:
- Three-quarters of respondents say a reduction in federal corporation tax will increase their appetite for M&A
- Just over half of the participants (51 percent) estimate that M&A improved their underlying earnings per share (EPS) by between 3 percent and 4 percent
- A quarter of respondents identify the acquisition of IP/technology as the main strategic rationale for deals in the year ahead
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.
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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