Global law firm White & Case LLP and M&A data provider, Mergermarket today released a new report, Building Momentum: US M&A in 2016. The report uses Mergermarket data to highlight the key factors and trends driving dealmaking in the US, while focusing on key sectors and private equity activity, as well as the US fintech sector.
The report finds that despite a slow start, US M&A has proven resilient during the last 12 months and confidence is high that 2017 will be another good year for dealmaking. It also takes an in-depth look at private equity, various global markets and industry sectors such as TMT, pharma, energy and fintech and AI. The entire report can be viewed by clicking here.
"The last year was up and down a little bit but overall, it was a strong year for M&A," says John Reiss, the Global Head of White & Case's Mergers & Acquisitions Group. "Despite the bumpiness, 2016’s uncertainty was always very temporary and quickly abated."
Report highlights include:
- Compared to a slow start to M&A deal activity in early 2016, the US M&A market is on track to deliver a strong 2017.
- The value of US M&A was up 52 percent in the second half of 2016, compared to the first. And although value (US$1.5 trillion) and volume (5,084 deals announced) were both down compared to 2015, 2016 ended as the second-highest value year since 2007.
- October, in particular, saw a material uptick in announced big-ticket transactions, including AT&T’s US$105.04 billion deal to acquire Time Warner and CenturyLink’s US$34.4 billion takeover of Level 3 Communications.
- Driving much of the action during 2016 is the technology, media and telecommunications (TMT) sector, which continues to dominate deal flow in terms of volume—with 1,114 deals in 2016 worth US$363 billion. Industrials and chemicals was the second busiest sector in terms of volume—with 832 deals worth US$207.12 billion.
Uncertainty around some high-profile broken deals, the UK’s Brexit vote and the US Presidential election has washed out of the market and the outlook for 2017 is positive.
"Trump's platform is extraordinarily pro-business, from the rolling back of regulation to fiscal stimulus to tax changes, both in terms of tax rates and repatriation opportunities. Those policies create a lot of confidence, and confidence helps the stock market and M&A," noted Reiss.
Three factors are likely to set the tone for M&A activity in the year ahead:
- The Trump administration’s ability to deliver—Donald Trump's pro-business policy platform has been warmly received by dealmakers and business.
- The health of the US stock market--The most important factor driving global M&A will be the strength of the US market, which is the world’s largest by far and therefore has an outsized impact.
- Trump's protectionist agenda and rhetoric do need to be taken into account but the fact remains that, for most buyers, the US is generally seen as more attractive than other jurisdictions and the new administration’s pro-business agenda should outweigh any protectionist concerns.
As a new year begins, the fundamentals for strong M&A remain firmly in place, including: strong cash on corporate balance sheets; robust stock markets; steady economic growth and low cost of capital. Global M&A is likely to be strong in 2017 and the US will be perceived as a good place to do deals relative to the alternatives.
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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