Global law firm White & Case LLP and Mergermarket today released a new report, US M&A 2014-2015: Full Steam Ahead, which examines 2014 M&A data and looks ahead to 2015.
"The momentum from last year looks to continue into 2015," said John Reiss, Head of White & Case's Global Mergers & Acquisitions Practice. "Although buyers should proceed with caution, prospects for dealmaking in 2015 remain quite positive because many of the underlining factors which drove M&A activity in 2014 continue to be present."
The report can be viewed by clicking here.
Confirming that 2014 was a banner year for the US M&A market, the report found that deal activity was at its highest level for five years. A number of factors have increased confidence among corporates, bringing them back to the dealmaking table with a fervor. Stock markets are strong in the US, and many companies have substantial cash piles to invest as well as the backing of shareholders pressing for more deals. Importantly, the US economy is stable and growing – particularly compared to markets in Europe and Asia – and this is attracting an increasing number of non-US buyers.
Key highlights from the report include:
(1) Companies announced 4,795 deals worth US$1.4 trillion in 2014, a 22 percent increase in the number of deals and a 57 percent increase in deal values compared to 2013.
(2) In terms of sectors, technology, media and telecommunications (TMT) was the most active sector in 2014 with 1,029 deals. Energy, mining and utilities recorded the highest value in 2014 with US$318 billion worth of deals, more than double that of 2013. In the pharma sector, deal value rose 134 percent between 2013 and 2014, from US$100 billion to US$232 billion.
(3) Megadeals, such as the proposed US$66 billion acquisition of Allergan by Actavis, have been at the forefront of the revival as sectors such as pharma and TMT looked to consolidate, and have helped to drive the value increase. Megadeals increased 51 percent in 2014 compared to 2013.
(4) The number of deals also increased significantly, although not as much as value. In 2015, we expect a broader, deeper and more active M&A market with the prospect of dealmaking activity spreading more broadly to the under US$5 billion market, which will drive volumes higher.
(5) In the private equity arena, buyers have stepped back somewhat due to extremely high seller expectations. The value of acquisitions by buyout firms was only 11 percent of total deal value, the lowest in three years and a significant drop from 33 percent in 2007.
(6) Overall, deal value fell in January 2015 compared to December 2014, but that is consistent with patterns in recent years, with value remaining static or falling from December to January in the previous two years.
(7) A major theme in 2014 was the discrepancy between the increased in deal value and volume. While aggregate deal value is up substantially, which is creating excitement around the M&A market, aggregate deal volume has not increased as much.
This is the second in a series of reports White & Case has released about US M&A activity. In November, the Firm released, Back in the Game: The Rise of US M&A, a report which examined M&A data from the first half of 2014. That report can be viewed here.
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