Global M&A reached $3.7 trillion in 2016, dropping 16%, and the number of deals increased slightly by 1% when compared to last year. While 2016 did not match 2015’s record-levels, activity was still robust. Compared to 2014, activity increased by 5%.

Activity in the fourth quarter reached $1.2 trillion with 13,504 deals announced, a 50% increase in deal value and 18% increase in the number of deals when compared to 3Q 2016. This year, there were a number of interesting deals to note, including the AT&T’s acquisition of Time Warner transactionVerizon’s deal with Yahoo, and GE Oil and Gas combining with Baker Hughes.

Click on the infographic for a closer look at M&A in 2016.

M&A Update Year End 2016 - Capstone Infographic

After hitting record-high levels in 2015, global M&A activity dropped significantly in the first half of 2016. It was the slowest first six month period for global mergers and acquisitions in the past two years. The value of deals decreased from $2.03 trillion to $1.65 trillion (19%) while the number of deals decreased from 22,153 to 21,087 (5%). While overall activity declined, deals announced in the second quarter of 2016 increased by 24% when compared to the first quarter. The downturn in value has been attributed to fewer mega deals (deals over $5 billion).

Global middle market M&A (deals under $500 million) remained relatively stable compared to overall activity. Deal value and volume fell by just 6% and 2%, respectively.

Looking to the future, uncertainty hampers M&A activity. Dealmakers cited concerns about “Brexit,” the U.K.’s vote to leave the European Union and the upcoming U.S. presidential election in November.

Deals in the News

M&A update 1H 2016 Infographic

M&A activity in the first 9 months of 2015 remained strong reaching $3.2 trillion globally. It was the strongest first 9-month period since 2007 for global mergers and acquisitions.

The trend of large, mega deals continued in the third quarter of 2015.  Global deal value increased by 32% in the first 9 months of 2015 when compared to the same time period in 2014. On the other hand, deal volume remained relatively flat, only increasing by 2.3%. The average deal size was $103 million, a 30% increase from 2014.

In the US, there were $1.5 trillion in the first nine months of 2015, a 46% increase in value when compared to the first 9 months of 2014.  Click on our infographic for more insights on M&A activity in 3Q 2015.

M&A update 3Q 2015

 

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Global dealmaking remains robust, reaching $2.2 trillion in the first half of 2015, according to Thomson Reuters data. This is an increase of nearly 40% from the first half of 2014 and the most active half since 2007. However, the number of deals only increased slightly, by 3%. The trend of fewer, larger transactions continues: mega deals accounted for 50% of M&A value in the first half. Average deal size increased by 34% when compared to 1H 2014.

M&A is strong due to favorable market conditions: abundant cheap financing, record stock prices, and renewed confidence in the economy. The U.S. market continues to drive global activity. U.S. transactions reached a record $1.02 trillion – the first time activity passed $1 trillion in a half-year period.

Check out our infographic for more:

M&A Update 1H 2015

 

Global mergers and acquisitions reached $854 billion in the first quarter of 2015, a 25% increase from 2014 values. According to the Financial Times, this is the fastest start M&A has had since 2007.

While deal value increased dramatically in the first three months of 2015, the number of deals decreased slightly. The trend of fewer, larger transactions continues in 2015. Average deal size for Q1 2015 was $93 million, a 28% increase from $73 million in Q1 2014.

Check out our infographic for a snapshot on global mergers and acquisitions in Q1 2015. Click on the image for a closer look.

M&A Update Q1 2015 Infographic

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Last year was a record-breaking one for M&A. Global deal-making reached a 7-year high with 40,298 transactions amounting to $3.5 trillion.

With cheap debt financing readily available and stock prices rising, more companies pursued M&A in 2014. The improving U.S. economy greatly contributed to robust activity; at $1.53 trillion, the U.S. accounted for 44% of global M&A activity.

Top industries for M&A worldwide included oil and gas ($409 billion), pharmaceuticals ($210 billion), and cable ($187 billion). In the U.S., energy & power ($338 billion) and healthcare ($237 billion) topped the list, followed by media & entertainment ($208 billion) and high technology ($168 billion), according to Reuters data.

As I noted this past November, CEOs and executives are continuously looking for new ways to grow, including mergers and acquisitions. Most importantly, it seems that CEOs and boards are finally on the same page about M&A.

According to Dealbook, “Corporate boards and management teams have come to realize that their ability to expand their companies on their own has become more difficult. A substantial move, like acquiring a major competitor or complementary business, is now seen as necessary to move the needle.”

Given this spirit of internal cooperation, 2015 is setting out to be a year of robust activity as well.

The first few weeks of 2015 already produced some exciting news in M&A.

Coach has acquired luxury shoe retailer Stuart Weitzman for $574 million as part of its strategy to become an “upscale lifestyle brand.”

Facebook has also acquired wit.ai, a company that makes voice recognition software for wearable devices. Such devices as Apple’s iWatch are the next hot trend in technology as companies like Apple, Google and Facebook compete to connect devices from watches, kitchen appliances and thermostats to the Internet. Watch for more exiting deals in this arena in 2015.

Shire has also agreed to buy NPS Pharmaceuticals for $5.2 billion cash in the first big corporate acquisition of 2015. Last year Shire agreed to sell to AbbVie in deal that would allow U.S.-based AbbVie to reincorporate. However, due to proposed regulatory changes aimed at limiting tax inversions, AbbVie walked away from the deal. This cross-border deal shows the general trend of consolidation in the pharmaceutical industry and that availability of cash due to low interest rates.

Take a look at our infographic for more details on 2014 deal activity. (Click on the image for a closer look.)

Mergers and Acquisitions 2014 Year Review Infographic by Capstone

Next year will be a strong one for strategic acquirers. A KPMG survey reports 82% of executives expect to execute at least one acquisition in 2015, up from 63% in 2014. This is consistent with what Capstone has been seeing in the marketplace. Our survey of midmarket executives earlier in 2014 revealed that, 60% of midmarket executives reported M&A activity in 2014 and 44% already plan to execute an acquisition in 2015.

2015 Mergers and Acquisitions

Expect robust M&A activity in 2015. Click on the infographic for a closer look.

Large cash reserves, low interest rates and consumer confidence are key drivers behind M&A activity. U.S. corporations held a record $1.65 trillion in cash in mid-2014 and have finally begun spending their war chest on stock buybacks and M&A. The study anticipates large deals valued at $250 million, $500 million and $1 billion.

“Buyers are paying a premium for targets that will allow them to realize long-term strategic goals and gain an advantage over the competition,” says Dan Tiemann of KPMG.

This is good news. For too long after the recession, corporate America has been afraid to take risks. Many companies have remained on the sidelines and others have focused on acquisitions driven by cost-cutting to increase profits rather than on a sustainable strategy.

We have long encouraged clients to pursue targets that most closely support their long-term growth, including not-for-sale acquisitions. This may mean paying a little bit more upfront to execute an acquisition that will grow your business exponentially. Strategic acquirers do not qualify “good deals” on price alone. They understand the cheapest or the easiest deals do not necessarily meet their needs. Instead, they are looking for the company that will best serve their growth objectives.

Strategic acquisitions allow you to accelerate your growth and open up many opportunities that are unavailable through organic means alone. I am encouraged that more companies are thinking about long-term strategic growth—and I hope you are, too!

In the first nine months of 2014, US transactions made up 51% of global mergers and acquisitions indicating confidence in the strength of the US economy.

In Europe, cash-stuffed German companies looked to international markets, especially the US, to drive growth. Recent deals include Siemens acquisition of Dresser Rand for $7.6 billion, Merck of Germany’s acquisition of Sigma-Aldrich for $17 billion and SAP’s acquisition of Concur for $8.3 billion. However, this confidence has not carried over to the fourth quarter. Europe and Asia now face fears of an economic slow-down, according to reports.

Check out our infographic for a snapshot on Global Mergers and Acquisitions in 3Q 2014. Click on the image for a closer look.

M&A Update: 3Q 2014

Burger King and Tim Hortons plan to merge in an $11 billion deal that will create a new fast food powerhouse. The merger has received significant attention from the media, dealmakers, regulators and consumers. Capstone’s infographic will show you what you need to know about this exciting transaction. Click on the image for a closer look.

Burger King Tim Hortons Merger Infographic

Interested in learning more? Read CEO David Braun’s analysis: Burger King – Tim Horton’s Mergeris Unappetizing Deal

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M&A activity was on the rise in the first six months of 2014. Global M&A increased 73 percent to $1.77  trillion and  Midmarket M&A increased 18 percent to $399.4 billion.

Check out our infographic for a snapshot on Global Mergers and Acquisitions in 1H 2014. Click on the image for a closer look.

1H 2014 Mergers and Acquisitions

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Strong healthcare M&A activity is predicted for 2014 as the industry faces market and regulatory changes.  Click on the infographic for a closer look at 2013 trends and 2014 predictions.

Healthcare Trends 2013 Outlook 2014

Capstone has compiled information on US mergers and acquisitions trends for the first nine months of 2013. Check out our infographic below.

US M&A 2013 3Q

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