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Global M&A major trends, opportunities and outlook 2017
Hello! Thanks for your question about trends in the M&A market and its outlook. The short version is that the first half of 2017 saw global deal volumes surge by 2% to US$1.6 trillion. The top 3 sectors, globally, on M&A activity were: the Energy & Power sector with US$240.6 billion in deal value, Real Estate sector with US$199.4 billion in deal value and the Industrial sector with US$195.7 billion in deal value. The global M&A market is set to have continued strong growth of cross-border transactions. Below you will find a deep dive of my findings.
METHODOLOGY
To complete this request, I reviewed the following information sources: Industry Reports, Corporate Websites and Trusted Media. The primary research sources were Thomson Reuters and Bloomberg. I explored the M&A activity in the first half of the year 2017 relative to the same period last year.
FINDINGS
1. NUMBER OF DEALS AND DEAL VALUE
The global M&A activity totaled US$1.6 trillion during the first half of 2017, a 2% rise relative to the same period last year. On the global deal count, 22,752 deals were announced in the first half of the year, a 4% decline relative to the same period last year. However, completed deals were fewer relative to the same period last year. The total number of worldwide completed deals declined by 8.9% to 16,777 from 18,412 while the deal value similarly declined by 10.3% to US$1.4 from US$1.6 in last year's first half of the year. The market saw 275 deals worth over US$1 billion and totaling to US$946.9 billion, relatively unchanged compared to last year's first half. The period recorded a 21% rise in the number of mega deals, deals whose value exceeds US$10 billion, to 17 deals relative to the same period last year.
Relative to the first quarter of 2017, the global total value of announced deals rose by 6% in the second quarter of the year to stand at US$775.8 billion. However, relative to the same period last year, the second quarter total deal value declined by 6%.
2. DEAL ACTIVITY ACROSS SECTORS
In terms of the global deal value across sectors, the Energy & Power sector had the largest volume of announced deals in the first half year of 2017 with announced deals totaling to US$240.6 billion, a 30.9% rise from the sector's value of US$183.7 billion in the same period last year. The other top four sectors based on the total announced deal value were: Real Estate at US$199.4 billion, Industrial at US$195.7 billion, Healthcare at US$162.3 billion and the Financial sector at US$149.7 billion. On a year-on-year basis, the sectors changed ranks in the following way:
SECTOR MOVEMENT IN SECTOR RANK
The Materials sector had the largest decline, 46%, in the value of announced deals followed by the Technology sector with a 34% decline relative to the same period last year. The two sectors were in the top five sectors in the first half of last year with the Material and Technology sectors at rank one and two respectively based on deal value. However, the sectors fell off the list on this year's rank of the top sectors in the first half of 2017.
3. REGIONAL M&A ACTIVITY
The section below provides an overview of M&A deal activities in five regional markets. The markets are: the Americas, Europe, Africa/Middle East, Asia Pacific (ex-Japan) and Japan. Europe reported the largest rise in announced deal values, 33%, on a year-on-year basis, with announced deal values totaling to US$448.9 billion while Japan saw the largest decline in announced value, 40.5%
a) The Americas
Deal volumes totaled US$892.5 billion and were flat relative to the same period last year. The region registered 9,488 announced deals, a 27.5% rise from 7,438 announced deals during the first half of last year.
The top three sectors in the U.S. market were: Energy & Power with a 19.6% market share and US$114.5 billion in deal volumes; Healthcare with a 15% market share and US$87.3 billion in deal volumes; and the Real Estate with a 10.1% market share and US$59.2 billion in deal value.
According to Dealogic, Canada has had the largest gain in deal value, 43%, on a year-to-date basis, while the U.S. has had the second lowest decline, -18%.
b) Europe, the Middle East and Africa (EMEA)
The announced deal volumes in the EMEA region totaled US$650.9 billion, a 19.2% rise from US$546.2 billion announced deals in the same period last year. The total deal count declined by 3.5% to 8,621 deals from 8,933 deals on a year-on-year basis.
The top 3 sectors in the region were: the Industrial sector with a market share of 17.7% and US$115.1 billion in deal volumes; Healthcare with a market share of 11.6% and US$75.8 billion in deal volumes; and Consumer Staples with a market share of 11.3% and US$73.8 billion in deal volumes.
According to Dealogic, on a year-to-date basis, Europe's total deal value is up by 17% while in the Middle East and Africa, deal activity has declined by 28%.
c) Asia Pacific (ex-Japan)
The announced deal volumes in the Asia Pacific (ex-Japan) region for the first half of the year totaled US$432.8 billion, a 14.2% rise from US$541.3 billion announced deals during the first half of last year. The total deal count declined slightly by 0.5% to 6,204 deals from 6,236 deals on a year-on-year basis.
share and US$86.5 billion in deal volumes; the Industrial sector with a 14.1% market share and US$61.1 billion in deal volumes; and the Financial sector with a 14% market share and US$60.4 billion in deal volumes.
According to Dealogic, on a year-to-date basis, the Asia Pacific region (ex-Japan) has had its deal value increase by 1%.
d) Japan
The Japanese market had the slowest growth in deal volume over the half year since 2013. The region announced deals valued at a total of US$62.8 billion, a 13.1% decrease from the same period last year. The total number of deals declined by 9.5% to 1,605 announced deals.
The top three sectors in the region were: the Industrial sector with a market share of 16% and US$10 billion in deal volumes; Technology with a market share of 14.3 and US$9 billion in deal volumes; and Healthcare with a market share of 13.2% and US$8.3 billion in deal volumes.
According to Dealogic, on a year-to-date basis, the deal value in the Japanese market has declined by 43%, the largest decline in the year across all M&A markets.
4. OUTLOOK
According to JP Morgan, the outlook for the M&A market in 2017 is as follows:
a) A continued active market - Competition, availability of low-cost funds and the need to complement organic growth will drive active participation of investors in M&A deals.
b) Regulatory uncertainty - Due to Brexit, elections in select countries and policy changes in the U.S. with the new administration. Additionally, regulatory controls on currency outflows such as in China.
c) Continued strong growth of cross-border transactions - Different economic, market and consumer dynamics will drive cross-border transactions. Already this is evident with global cross border transactions totaling $703.8bn in the first half of this year, a 27.8% rise relative to the same period last year.
CONCLUSION
To wrap it up, the first half of 2017 saw global deal volumes surge by 2% to US$1.6 trillion. The top 3 sectors, globally, on M&A activity were: the Energy & Power sector with US$240.6 billion in deal value, Real Estate sector with US$199.4 billion in deal value and the Industrial sector with US$195.7 billion in deal value. The global M&A market is set to have continued strong growth of cross-border transactions.
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