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Dealmakers Pursuing Acquisitions in the Face of Geopolitical Uncertainty

Richard A. Martin, Senior Director, Merrill Corporation | September 29, 2017

As geopolitical uncertainty continues into Q3 of 2017, dealmakers continue to pursue acquisitions, but with caution. This cautious approach is seeing dealmakers pursue fewer deals, which is resulting in higher values. Indeed, August 2017 produced a higher total deal value for the month despite lower deal volumes when compared to 2016. 

Last month saw 926 M&A transactions worldwide worth US$216bn – 503 fewer deals, but a year-over-year (YoY) value increase of 5.1%. This trend is echoed in the year-to-date (YTD) global figures, with the first eight months of 2017 tallying 10,891 deals worldwide worth US$1.96tn. YoY these figures represent 1,223 fewer deals but a 4.8% rise in overall value. 

Sector-wise, Energy, Mining & Utilities continued to drive the highest M&A value in August. This sector included the two largest deals of the month, contributing to a total of 81 deals valued at US$65.7bn. 

North America contributed the majority to global deal value last month and witnessed the highest volume among the regions, achieving 53.1% of the global value total (355 deals, US$114.6bn). Second place in deal value was the Asia-Pacific region – surprisingly exceeding that of Europe – with 22.1% of the global total (US$47.8bn) compared to 20.2% for Europe (US$43.7bn). 

That said, European M&A YTD is currently 20.1% ahead when compared to 2016, following US$587.2bn changing hands so far this year. This compares to US$488.9bn in the first eight months of 2016. 

In Central and South America, there were a total of 347 deals from January to August, valued at US$41.9bn. That is five fewer deals but a 12% increase in value YoY. 

The Middle East & Africa (MEA) region saw 13 deals in August – the lowest deal count seen for the month since 2004 (eight deals, US$847m). In line with the global trend however, the total deal value is the largest seen in August since 2013, at US$3.8bn. 

The growing trend of large private equity deals continued in August as well. Total private equity (PE) buyout value in July and August 2017 alone nearly exceeded the Q3 2016 total – with 15 PE deals valued at US$1bn or more during the month. Overall in July and August, there were 391 PE buyouts worldwide valued at US$97.5bn compared to 758 PE deals valued at US$97.7bn in all of Q3 2016.

Regional highlights

Regional trends have been impacted by various geopolitical factors, resulting in some record breaking increases and decreases:

  • In China, outbound dealmaking was down 45.8% by value and almost half by deal count compared to August 2016.
  • Consumer activity provided Central & South America’s top deal of the month: Mexican dairy producer Grupo Lala’s US$1.7bn acquisition of a 91.9% stake in Brazilian dairy company Vigor Alimentos.
  • Japan outbound activity experienced its highest August value on Mergermarket record at US$12.2bn from 23 deals in 2017. 

Looking for a deeper dive into global M&A trends? Download the entire Monthly M&A Insider. This publication explores the global M&A market with respect to the numbers, movements and trends, as well as revealing the top financial and legal advisors – globally and across six regions (North America, Central and South America, Europe, Middle East and Africa, Asia-Pacific and Japan). 

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