Our report "US M&A 2014-2015: Full steam ahead" provides data and analysis for the full year, highlights factors that drove the surge and offers a perspective on why US M&A is likely to continue to be strong in 2015.
The final figures are in, and it is safe to say that 2014 was a banner year for the US M&A market. Deal activity reached a 5-year high.
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.
A number of factors increased confidence among corporates, bringing them back to the dealmaking table with fervor. Stock markets are strong in the United States, 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 to the United States.
Megadeals, such as the proposed US$66 billion acquisition of Allergan by Actavis, have been at the forefront of the revival and have helped to drive the value increase — particularly as sectors, such as pharma and TMT, looked to consolidate.
The number of deals also increased significantly, although not as much as value. We expect a broader, deeper and more active M&A market in 2015, with the prospect of dealmaking activity spreading to the under-US$5 billion market, which will drive volumes higher.
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. However, increased volatility in the market, which we have seen in the first weeks of 2015, may create greater opportunities if prices decline. On the other hand, there is no certainty that sellers' expectations will quickly reset.
Overall, deal value fell in January compared to December, but that is consistent with patterns in recent years, with value remaining static or falling from December to January in the previous two years.
The momentum built in the last year looks set to continue into 2015, but there is no room for complacency. Dealmakers will be aware of recent stock market volatility, falling oil prices and a potential pullback in the leverage markets.
Although buyers should proceed with caution, there is good reason to be optimistic about M&A markets in 2015.
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Watch Video: White & Case partner Roger Kiem explains why German buyers are interested in the US M&A market in 2015
US M&A hits a home run
On the back of headline-grabbing megadeals and a more stable economy, US M&A staged a dramatic comeback in 2014
The US M&A market takes center stage
• US deal values reached a five-year high in 2014 • Deal volumes were up by almost a quarter compared with 2013 • Stable economy, record cash balances and backing from shareholders have set the foundations for a rise in M&A • Megadeals are up 51 percent in volume and 67 percent in value • Deals under US$1bn are up 18% in volume and 28% in value
Three sectors driving deal value
• TMT was the most active sector with 1,029 deals in 2014 • M&A was driven by consolidation and bundling in the TMT market • 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, medical and biotech sector, deal value rose 134 percent between 2013 and 2014, from US$100 billion to US$232 billion.
US M&A in figures
• Total US M&A 2009 - 2014 • TMT, pharma and industrials poised to be most active in 2015 • Inbound M&A by country, 2014 • Proportion of US M&A accounted for by private equity
PE exits reach five-year high
• Private equity exit values reached a five year high • Exit volumes increased 31 percent from 2013 to 2014 • Buyout volume was up 14 percent from 2013
Looking ahead: All eyes on 2015
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