M&A activity has been trending upward in the last year and half to two years. There was a particular uplift in 2015 which reached the record-breaking value of $4.3 trillion worldwide. Some of that was fear-based because of what was going to happen with capital gain rates so many deals were completed in the latter half of 2015. Although activity dropped in 2016, it was still one of the most active years in the past ten years.

So far in 2017, average deal size is up and the number of deals is down for worldwide M&A activity. According to Reuters data, global M&A value reached $778 billion, increasing 12% while the number of deals decreased reached 11,441, a 9% decrease when compared to 1Q 2016. In the US deal value rose by 5% and the number of deals rose by 20%.

Middle Market Opportunity

Globally, bigger deals are back in vogue, and M&A is still being driven by strategic buyers rather than financial buyers. Large companies now have more confidence in deploying cash to execute these large transactions. However, not all of these large acquisitions will stick. There may be some “corporate indigestion” after taking such large bites and there will likely be some seeds and bones they will end up having to spit out in the form of spinoffs or divestments. That creates challenges and opportunities for the middle market companies who have the chance to fill some of those gaps.

M&A Outlook

In general from everything we are seeing right now, we expect activity will be robust for the next 12 months through the end of the 1Q 2018 , especially with the potential for tax reform related to repatriation of foreign cash. Leaders should anticipate a wave of activity from competitors, customers and suppliers and be prepared to handle changing industry dynamics. Strategic buyers should expect more competition from private equity groups as interest rates rise and PE groups become more active.

Click on the infographic for a closer look at M&A in the first quarter of 2017.

M&A Update 1Q 2017 - Capstone Strategic

Feature Photo Credit: Barn Images, Infographic by Capstone Strategic, Inc.

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

 

Feature Photo Credit: Mark Dixon via Flickr cc

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

Feature photo credit: rodposse via Flickr cc

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

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

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

Feature Photo Credit: www.flazingo.com via Flickr cc

The first quarter of 2014 closed on a positive note for M&A with large transactions driving deal confidence. Click on the graphic for a closer look at M&A highlights from Q1 2014.

Mega Deals in q1 2014

 

 

Feature Photo Credit: dannymac15_1999 via Compfight cc