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We take a look at the top five trends driving private equity activity in 2018.
Global private equity activity is on a roll. In 2017 the industry announced 5,224 transactions, an annual record for volume, while the US$879 billion worth of deals marked a post-crisis high. After a banner year, the asset class has shown no signs of slowing down in 2018—US$181.24 billion changed hands in the first three months of the year, marking the highest Q1 deal value since 2007.
Strong interest from overseas buyers drove Australian M&A to a record high in 2017, yet closer regulatory scrutiny of foreign investors is a potential concern.
The Australian M&A market delivered its best year on record for deal volume in 2017, with 613 deals worth US$85.49 billion announced over the year, up from the 517 transactions worth US$65.9 billion in 2016.
With oil prices recovering and greater pricing certainty bringing a quiet optimism to the market, the pieces are in place for oil & gas M&A to return to the fore in 2018.
Since the oil price crash that took hold in 2014, global oil & gas M&A figures have been muted.
With Brexit moving closer, UK firms are increasingly diverting their M&A investment across the Atlantic.
UK firms are investing in US firms at an impressive rate. In 2017, US$109.3 billion was invested across 168 transactions—a record year both in terms of value and volume. On a dollar basis this far exceeds even the peak of the credit boom in 2007, when British companies backed US$60.5 billion worth of US acquisitions.
While diplomatic relations between the US and Germany may have cooled under Trump’s presidency, German dealmakers are investing more in US M&A than ever before.
German investors took part in a record level of M&A deals outside their borders in 2017, securing 394 outbound dealsworth US$39 billion over the year. The US attracted the majority of this activity, both by value and volume, with 77 announced deals worth US$11.6 billion targeting US firms marking a record annual volume.
China plans to consolidate its three merger and antitrust agencies into a single body. What does this mean for dealmakers?
The ongoing evolution of China’s state ministries may have significant implications for dealmakers.
While Taiwan traditionally attracts global attention for its semiconductor assets, local firms are increasingly looking to move into markets overseas.
Taiwanese companies are stepping up their presence in the global M&A market. The value of M&A transactions undertaken by local firms investing abroad in 2017 reached a record high, with US$7.25 billion spent across 28 deals. The first quarter of 2018 indicates another record annual deal value may be on its way, with US$2.63 billion already spent on overseas transactions.
Macron's bold vision for Europe has translated into a flurry of dealmaking activity as French firms seek growth abroad.
France is opening its eyes to a more inclusive, grander vision of Europe in which France takes center stage. Year-end 2017 M&A figures reflect this change, painting a positive picture for the months ahead. French acquirers invested US$113.4 billion across 502 deals outside the country's borders over the year, an all-time record annual volume for outbound transactions.
Peak funding conditions experienced in 2017 continue to boost investor sentiment, but challenges loom.
In the first quarter of 2018, global private equity activity picked up right where it had left off in 2017, which saw a record volume of transactions. In the first quarter of the year, a total of US$113.7 billion was invested in 699 buyout deals—a 27% climb in value compared to Q1 2017, and the strongest start to a year since 2007.
A record-setting first quarter of 2018 has laid the foundation for another blockbuster year of dealmaking, with US M&A in full swing and disruptive market entrants continuing to fuel activity.
Global M&A in the first quarter of 2018 saw a total of 3,776 deals worth US$890.7 billion, marking an 18% value increase compared to Q1 2017, and the highest deal value achieved in a first quarter on record.
Asset shortages and rapid technological change are forcing many to rethink what "infrastructure" really means.
From airports to power grids, infrastructure assets are increasingly sought by investors worldwide. The asset class offers attractive returns, reduced volatility, stable cash flows, inflation-linked revenues and diversification advantages.
Private equity funds targeting the region shook off political and economic change to deliver a record 2017, while economic recovery and reforms in key markets prophesy a strong 2018.
The Latin American and Caribbean private equity (PE) market enjoyed a record-breaking year in 2017. A flurry of activity in the region saw the industry secure 103 deals over the year, reflecting intensifying competition for assets.
A push for greater regulatory clarity combined with the One Belt, One Road initiative could pave the way for an increased focus on overseas dealmaking in 2018.
At first glance, it would appear that Chinese buyers lost their appetite for foreign dealmaking in 2017. Corporations and private equity funds operating in Asia's largest economy were responsible for 361 outbound deals worth US$125.14 billion over the year, with value decreasing by 37.2 percent compared to 2016.
Three trends—including increasing pressure from clients—may drive PE firms to improve gender balance within their ranks and promote more women to senior positions in the field.
US buyout activity hit an all-time high in 2017, and a post-crisis high for value, with a total of 1,176 announced deals adding up to a total of US$190.76 billion. A new record was also set for global buyout volume, while global value similarly reached a post-crisis high.
Media M&A deal value hit its second-highest year on record in 2017, as the need for traditional media groups to build scale led to a number of market-defining deals.
Rapid consolidation across the media industry is pushing a series of landmark megadeals over the line. In 2017, there were 555 deals globally across the sector worth US$131 billion—the second-highest value total since 2008.
A shakeup within the consumer industry generated a flurry of deals in 2017. We track three influential trends that will continue to drive activity in 2018.
A fundamental shift in buying habits is driving M&A activity in the consumer sector. In reaction to a growing “on-demand” culture—where customers are expecting products and services delivered instantly—firms are using M&A as a strategy to rethink business models.
We look at the major trends driving global M&A through 2017 and into 2018: resurgence in the energy sector, resilience among UK dealmakers and an increasing appetite for overseas acquisitions by US firms.
The value of global M&A activity in 2017 was down slightly compared to 2016, continuing at a less frenetic pace than in 2015, a record breaker. The number of deals was also down, remaining just below the record set for volume in 2016.
Buyout volume in 2017 reached a record high, and deal value reached levels not seen since the financial crisis. Meanwhile intense competition for assets is causing sellers to demand higher multiples.
Private equity enjoyed a banner year in 2017. Record levels of dry powder flooded the market in 2017, reaching an all-time high of US$954 billion in September, according to research group Preqin. This prompted intense competition for assets which in turn pushed up valuations.
From payment processing to NPLs, the private equity industry is stepping up its role in dealmaking within the financial services sector
The financial crisis provided an opportunity for private equity firms to gain a foothold in the financial services space, and they haven’t looked back. As the opening figure shows, 2015 was a landmark year for sponsors, who had traditionally found it difficult to thrive due to tough competition from strategics within a regulated sector.
Investors are looking to logistics and technology in Southeast Asia’s financial, trade and innovation hub, with sovereign wealth funds and Chinese firms acting as the keenest bidders
When year-end numbers are tallied in a few months, Singapore in 2017 will have set a record for M&A transactions by value, as investors continue to be drawn to one of the most investor-friendly destinations in Southeast Asia.
Motivated by national security concerns, political pressures and a sheer volume of filings, CFIUS is placing increased scrutiny on foreign acquisitions
The Committee on Foreign Investment in the United States (CFIUS) appears to be putting more inbound US M&A deals on hold than at any time in its history. The inter-agency committee, tasked with reviewing the national security implications of foreign investments in US companies, has increased its scrutiny of foreign investment transactions, which has coincided with a drop in inbound activity M&A targeting US firms.
Trump’s trade policies are causing foreign investors to be wary, while a volatile peso is pushing Mexican firms to secure assets abroad
Mexican M&A is at a crossroads. An uncertain political environment, volatile currency and unstable relationship with the US signal an uncertain future for dealmaking within the country. And while the first three quarters of 2017’s value have seen an 18.4% uptick compared to the same period in 2016, volume is still well short of 2016 numbers, with Q3 2017 volume barely above half of Q3 2016’s volume.
Buyout firms bank on rising demand for same-day delivery and technological innovation to drive future returns
A shift in consumer demand is causing buyout firms to turn their attention to the transport and logistics industry. Private equity (PE) investment in the global transportation sector climbed to its highest quarterly value on record in the third quarter, with firms investing US$21.35 billion across 23 deals over the period.
The UK M&A market is weathering the Brexit storm, as strong economic fundamentals continue to draw interest from international bidders
Concerns that Britain’s decision to leave the European Union (EU) would deter foreign investment appear, at least so far, to be overstated. With 155 deals worth US$35.8 billion announced in Q3 2017, inbound M&A activity targeting UK firms topped all other markets in Western Europe by both value and volume. And although deal value has fluctuated over recent years, inbound deal volume into the UK has shown a consistent if small increase, rising from 468 deals in Q1-Q3 2016 to 485 in Q1-Q3 2017.
Regulatory uncertainty, the drive toward consolidation and the constant pressure to innovate will shape dealmaking
M&A activity targeting the US power and utilities sector experienced a rebound in activity during Q3 following a poor-performing second quarter. A total of 27 deals valued at US$33.9 billion was a sevenfold increase in value compared to Q2’s figure and the third highest quarterly value on record.
Record fundraising and growing demand in key sectors helped private equity deal value soar in 2017
The accelerating rate of buyout activity has been a stand-out dealmaking trend in 2017, with deal value hitting a post-crisis peak. So far in 2017, the total value of US$372.1 billion in announced deals (from 2,213 buyouts) stands just 7.7 percent behind 2016’s total value with a quarter left to run.
Global M&A decreased in the third quarter, despite generally robust economic fundamentals
Although the financial markets were generally strong during Q3 2017, global M&A activity decelerated, with 3,857 announced deals worth US$673 billion reflecting a 14 percent decrease in value compared to Q2 and a 24 percent value decrease as compared to the same period in 2016.
We round up the major stories in the world of dealmaking from the past quarter including a China downturn, an aerospace upswing and an oil price turnaround
Private equity investment in real estate shot up sharply in Q2 2017, as dealmakers look to deploy dry powder in increasingly sizable deals
Private equity real estate deal value for Q2 2017, including exits, climbed four-fold on Q1 numbers to reach US$11.96 billion. Deal volume was up materially too, rising from five deals in Q1 to 14 deals in Q2. The strong performance makes Q2 2017 the highest-valued second quarter for private equity real estate deal value since the financial crisis.
Germany achieved a record for M&A deal value in Q2, with industrial deals dominating the market
Despite uncertainty around the federal election coming on September 24, there is a healthy appetite for German assets. Germany saw its highest quarterly M&A value on record in Q2, climbing to US$63.2 billion in the three months to the end of June. M&A activity was buoyed by continued economic growth (in its June economic forecast, the OECD projected “solid” GDP growth of 2.3% for the year and a further decline in unemployment).
Shareholder activism is moving into the mainstream as activists launch ever-bolder campaigns
Increasing investor activism is driving M&A-related activity in Europe and North America, from outright acquisitions of companies targeted by activists to divestiture and spin-off announcements.
Changing consumer habits and disruptive innovations are inspiring mergers designed to combine the best features from virtual and concrete retailers.
Consumer sector M&A is looking good. In H1 2017, the sector recorded the highest value from cross-border M&A deals of any sector, with US$142.5 billion spread over 300 deals. Add domestic deals, and the consumer sector takes second place with US$241.8 billion. Cross-border value in the first half of 2017 has already outstripped the whole of 2016, which saw US$118.4 billion in deal value across 691 consumer deals.
The region secured a host of megadeals despite political volatility, with EU powerhouses leading the way.
Western European firms continue to command high price tags—even against a backdrop of political uncertainty. There were 1,285 deals worth US$254.7 billion announced in Q2, a steep rise in value compared to the previous quarter. The region fared well from a global perspective, with its share in global deal value shooting up from 25.6% in Q1 to 35.6% in Q2.
Activity was up compared to Q1 2017, but deal value was down by more than half from the peak of Q4 2015.
There were 381 deals by Chinese bidders valued at US$94.6 billion in the second quarter of 2017. While that represents a scant five more deals than in Q1, it also shows a value jump of 34%.
Global buyout activity defies market uncertainty to reach a post-crisis high, as funds deploy record levels of dry powder.
Buyout activity delivered a stellar performance in Q2. There were 707 deals worth US$144 billion, up 75 percent by value from the previous quarter to reach the highest quarterly value since Q2 2007. PE’s attraction as an asset class to investors worldwide is resulting in record levels of dry powder generating substantial PE M&A activity. Research firm Preqin estimates the current amount available for investment at US$842 billion.
Despite a slight dip in value for the quarter, deal value is up year-to-date, compared to H1 2016
After a steady first quarter, global M&A dipped in Q2 against a backdrop of ongoing political and macroeconomic uncertainty. Volume fell from 4,304 deals in Q1 2017 to 3,683 deals in Q2—the lowest quarterly volume since Q2 2013. Meanwhile, a Q2 value of US$715 billion saw a 4.4 percent decrease compared to the same period last year.
Innovation is at the heart of the boom in Israeli M&A and the trend is set to continue, according to an exclusive new survey of senior Israeli dealmakers
Disruption and innovation are driving deals to new heights in the Israeli M&A market. In 2016, there were 99 deals with an Israeli target worth a total of US$20 billion, a record in value terms and a joint record (shared with 2015) by volume.
As oil prices stabilize around the US$50 mark, dealmakers are coming back to the table
Buoyed by the arrival of a pro-oil administration in the White House and relative price stability, M&A activity in the beleaguered oil and gas sector is beginning to regain some momentum.
French dealmakers announced significant outbound megadeals in the first quarter; Macron's victory could provide a much-needed boost for inbound deals
In a deal landscape dominated by cross-border consumer megadeals, French businesses announced US$47.63 billion worth of deals in the first quarter of 2017—the highest value quarter since Q3 2008. This is perhaps surprising, given the uncertainty that persisted throughout most of the quarter regarding the outcome of the contentious French presidential election.
Auto sector M&A just hit a seven-year high. But the future could be even brighter, as technology firms seek opportunities within the auto industry
The automotive sector has staged a remarkable comeback. Worldwide car sales grew by 4.8% in 2016 to US$88.1 million, the highest figure for at least a decade, according to data from investment bank Macquarie.
PE funds establish themselves within the emerging South Korean market to take advantage of local growth opportunities
Private equity buyouts in South Korea reached their highest first quarter valuation in more than a decade, with US$3.47 billion spent across 12 transactions. This figure represents a 31% value increase compared to the same period in 2016 (US$2.65 billion, 13 transactions), and a strong recovery from a discouraging US$0.87 billion value in 2016’s third quarter.
A rash of high-priced buyouts and a bid for a popular asset manager ramp up value at the start of the year
The financial services industry saw a 29 percent jump in year-on-year deal value in the first quarter of 2017. It was also the second-highest Q1 since 2011, which augurs well for the year ahead. Deals totalled US$55.8 billion in Q1 2017, compared with US$43.3 billion in the same period last year.
Inbound megadeals in the energy sector and a buoyant technology market help the deal market flourish
With deals valued at US$18.2 billion, Q1 2017 was the fourth-highest quarter in Indian M&A history. This comes on the back of a blockbusting 2016, which saw deal value hit US$66.4 billion—the highest year on record.
Spurred by semiconductor company consolidations, TMT activity dominated both inbound and outbound dealmaking
The 2017 kickoff in Taiwan M&A showed the second highest Q1 deal volume since Q1 2010, with 13 deals. This matched the Q1 2016 total - which itself was a busy year for M&A in Taiwan.
Despite economic volatility, uncertain elections and the Brexit effect, average valuations rose, year on year
Although the number of M&A deals fell in Q1, dealmakers looking at Western Europe are still willing to pay for the right target—2017 saw the second highest Q1 value for the region since 2008 (with Q1 2016 taking the top spot).
Megadeals from the UK and Japan help the US kick off the year in style
US dealmakers, both as sellers and bidders, have had an encouraging start to the M&A year. Deal value targeting the US (including domestic deals) was up by 21% year on year – from US$251.3 billion in Q1 2016 to US$303.1 billion in the first quarter of this year. The boost from megadeals meant that value rose even as the number of deals fell by 8% year on year.
Consumer sector and cross-border deals boost the M&A market
A number of factors spread uncertainty across the geopolitical spectrum in the year’s first quarter, including the official kick off of the Brexit process in the UK and the challenges faced by the new Trump administration in the US. Yet dealmakers seemed to shrug off the uncertainties. Cross-border deal value hit US$341.9 billion, the second highest first-quarter amount in the last decade after Q1 2008. Overall deal value for Q1 2017 stood at US$693 billion – the second highest Q1 since 2007 (behind Q1 2015, a record-breaking year).
PE buyouts hit new heights in Asia-Pacific in 2016. And this trend looks likely to continue
The Asia Pacific region recorded its highest-ever private equity (PE) buyout value in 2016. The region played host to 399 buyouts worth a combined US$102.2 billion – a new value record, despite a slight dip in deal volume.
The post-Brexit M&A meltdown hasn’t happened – quite the opposite. But longer-term prospects look more uncertain
A cursory glance at UK inbound deal value figures for 2016 would give the impression that the Brexit decision has hit the UK M&A market hard, even in the eight months since the shock referendum vote. Inbound M&A value into the UK fell by 55% from US$348.5 billion in 2015 to US$156.4 billion in 2016. However, first impressions can be deceptive.
Western European dealmaking peaked in 2016, with the highest volume ever and extremely strong interest from China
There may have been political and economic storm clouds hanging over the region, but those did not stop Western Europe becoming a beacon for M&A in 2016.
Stabilising oil and commodity prices and opportunistic deals, saw M&A in the EMU sector rise again in 2016. And 2017 could be even stronger
After a relative drought, dealmaking in the energy, mining and utilities (EMU) sector regained momentum in 2016. The picture is mixed across the sub-sectors, but upside potential is clear; with the exception of 2014, the sector’s volume and value are at their highest points since 2007. Global EMU activity reached US$615.9 billion in 2016, compared to US$569.2 billion one year earlier, according to White & Case’s M&A Explorer. In value terms, the sector was second only to technology, media and telecommunications (TMT).
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