Global M&A continued to decelerate in Q3 amid ongoing global political uncertainty. A total of 3,774 deals worth US$667.1bn were announced globally in Q3. This marks a 24.2% drop in value year-over-year, with 739 fewer transactions.
Despite a drop in overall M&A activity, private equity (PE) provided a bright spot for deal activity in Q3. An abundance of dry powder and low interest rates have spurred buyout activity, in turn pushing global private equity activity to a post-crisis high. There were 661 PE deals worth US$138bn announced in Q3, representing a 41.2% hike in value compared to the same period in 2016, and the highest Q3 value since 2006.
A string of megadeals drove Energy, Mining & Utilities to the top of the value table in Q3. The sector attracted 292 deals worth US$131.8bn during the quarter, taking a 19.6% share on global M&A value. Bumper transactions such as utility provider Sempra Energy’s US$18.8bn acquisition of bankrupt power transmission company Energy Future Holdings and Total’s US$7.45bn takeover of Denmark’s Maersk Oil served to push up deal value.
Natural disasters and a stagnation of regulatory reform seem to have affected North American dealmaking confidence. There were 1,237 deals valued at US$295.5bn announced in Q3, a drop in volume by 266 transactions and a 32.8% fall-off in value compared to Q3 2016. Although a sharp drop in inbound M&A was seen, activity was fuelled by domestic deals within the US. Indeed, four of the top ten deals of the quarter globally took place between US firms. This trend suggests that Trump’s pro-business approach and commitment to domestic spending is having a positive effect on M&A, if only within US borders.
In line with the global trend, European M&A activity saw a dip in activity in Q3 by both deal value and count. There were 1,428 deals worth US$162.2bn announced in the third quarter, down 43.6% by value compared to Q2 (US$287.4bn, 1,850 deals).
Despite this, year-to-date activity shows positive momentum, with US$659bn up 20.8% compared to the same period in 2016. Despite ongoing uncertainty surrounding Brexit negotiations, the UK attracted the highest valued deal of the quarter: the US$12bn takeover of UK-based payment services firm Worldpay by US rival Vantiv. The deal highlights that the UK remains a popular destination for international dealmakers looking to seize prize assets. Despite 2017 not following the strong growth trajectory seen last year, a buoyant fourth quarter could yet materialize. There is a healthy pipeline of deals, an abundance of capital, and shareholders are putting pressure on corporates to secure transactions. All this could set up a very bright year end for the M&A market.
To take a deeper look at these trends, read the October 2017 issue of the Monthly M&A Insider, produced by Mergermarket for Merrill Corporation. The report 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).
Download the October 2017 M&A Insider report.