Sector overview: Tech and healthcare take the top spots
In terms of value, the technology and healthcare sectors—separately and, sometimes, in tandem—have ruled the M&A markets in 2019. Meanwhile, the consumer industry faced tough times—though there could be a rebound in 2020.
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The US technology, media and telecommunications (TMT) sector was the leading M&A sector for both volume and value in 2019, with 1,377 deals responsible for US$279.7 billion in value.
The key to this substantial total was the performance of the technology subsector. The tech sector generated US$206 billion of value from a total of 1,138 deals.
The largest deal in the sector saw Global Payments, the electronic payment processing company, purchase rival Total Systems Services for US$25.7 billion. This was one of several megadeals in the fintech arena and proves that there is plenty of life in the burgeoning payments subsector.
Other drivers in the tech industry include the continued attraction of Software as a Service (SaaS) companies, contributing two of the top three tech deals; security-focused buyouts such as Broadcom's acquisition of Symantec's enterprise assets for US$10.7 billion; and the convergence between healthcare and technology (healthtech), which is likely to be a major growth area in 2020 and beyond.
US $256.5 billion
The total value of deals targeting the US healthcare sector in 2019—an increase of 121 percent compared to 2018
The healthcare sector itself had a bumper 2019, at least in terms of deal value. A slew of megadeals saw the total value rise by 121 percent year-on-year to US$256.5 billion. A significant proportion of this was based on two biotechnology megadeals. The biggest deal of the year (in any sector) saw Bristol-Myers Squibb (BMS) spend US$89.5 billion on biotech Celgene. In a statement at the time of announcement, Giovanni Caforio, CEO of BMS, said: "We are creating a biotech leader with…a deep and broad pipeline that will drive sustainable growth."
These kinds of deals are likely to continue in 2020 and beyond, as Big Pharma companies look to create product pipelines to circumvent the threat from generics manufacturers.
One sector that experienced a challenging 2019 was consumer. Industry deal volume fell by 11 percent and value dropped 36 percent to US$76.9 billion. A combination of restructurings, bankruptcies, uncertainty and the ongoing battle between online and physical retail has hit the sector hard. However, it's worth noting that these issues could provide opportunities for restructuring specialists and PE buyers in the coming year. Watch this space.
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