Global law firm White & Case LLP and Mergermarket today released a new report, US M&A H1 2015: Riding High, which examines M&A activity during the first half of the year and covers what to expect in the year ahead. The report can be viewed by clicking here.
"There has seldom been a better set of circumstances – a stable US economy, low interest rates and available financing -- to create a perfect climate for dealmakers where both buyers and sellers are excited," said John Reiss, Head of White & Case's Global Mergers & Acquisitions Practice. "As robust as US deal activity is, the big question is whether this bull run can be sustained."
The report found that in the first six months of 2015, the US market delivered US$753.3 billion worth of deals, up from US$598 billion in H1 2014, making US M&A on target to post its best performance since 2007.
Additional key findings of the report include:
- Inbound value rose by 15 percent to US$163 billion in H1 2015, with Japan a particularly prominent investor. Indeed, Japan's total H1 spend of US$18.7 billion is higher than its entire 2013 total.
- Technology, media and telecommunications was the most active sector in H1 2015 with 449 deals worth US$234 billion, a US$90 billion year-on-year increase.
- The pharma, medical and biotech sector also saw strong activity with deal value rising from US$104 billion in H1 2014 to US$144 billion in H1 2015.
- Private equity buyouts fell to 398 in H1 2015, from 456 in H1 2014, suggesting financial sponsors are holding back in the face of high valuations and cash-rich strategic buyers.
Several factors could dampen M&A activity such as stock market volatility, uncertainty in the financing markets and anticipated interest rate increases.
"If stock prices continue to fall for a sustained period of time, enthusiasm for deals among buyers is likely to decline, particularly because it may take a while for sellers' expectations to adjust to new price realities," Reiss said. "A mismatch between buyers' and sellers' expectations would negatively affect M&A activity."
The report also identifies specific sectors to watch and examines topics such as management compensation, what issues dealmakers should consider before pursuing transactions and provides an in-depth analysis of the challenges Chinese investors face in the US under The Committee on Foreign Investment in the United States (CIFUS).
This is the third in a series of reports White & Case has released about US M&A activity. The two other reports, US M&A 2014-2015: Full Steam Ahead and Back in the Game: The Rise of US M&A can be viewed here and here.
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