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Global Deal Market Falters Despite Optimistic Start to 2017

Desmond Chua, DataSite Director, South East Asia & Australia | June 21, 2017

As we reach the halfway mark of 2017, macroeconomic factors still invoke caution among dealmakers as volatility and uncertainty becomes the norm. Despite this environment, global M&A value to date continues to exceed that of 2016 – thanks mostly to a strong Q1. May activity, however, was not a strong contributor to this. Globally, M&A activity fell by 484 deals and by 4.5% in value compared to the same month a year ago.

Encouraged by a pro-oil Trump administration in the US, and some improvement in price stability, M&A activity in oil and gas is beginning to regain some momentum. In fact, Energy, Mining and Utilities was the top performing sector in May with 96 deals worth US$41.1 bn.

As in April, North America showed the greatest increase in deal value of all regions. Europe followed closely second, with US$82.6bn in M&A transactions. These two regions made up 43.2% and 35.9% of global deal value respectively. In the Middle East and Africa, we saw the average deal value surpass Mergermarket record (US$318m) last month – while it dropped to US$375m year-to-date over the last month, it still remains the highest on Mergermarket record.

Among the strongest areas of activity we have seen throughout 2017 are private equity and cross-border deals. Global private equity saw 1,084 buyouts valued at US$192bn through the first five months of 2017, compared to 1,206 buyouts worth US$158bn during the same period last year. Meanwhile, the top three deals of the month were all cross-border transactions.

Top performers

Overall, while May activity slowed, the performance for 2017 so far compares positively to 2016, despite the volatility and issues plaguing global markets. Some of the top performances seen in May include:

  • On a sectoral basis, Energy, Mining & Utilities took top spot with 96 deals worth US$14.1bn.
  • Regionally, North America continued its reign as the strongest market from the previous two months, with 387 deals worth US$99.3bn.
  • Cross-border activity rose significantly in May. The value of deals between companies in different global regions grew 70.5% to US$107.3bn in the month.

For a deeper dive into these observations, I encourage you to download the June 2017 edition of the Monthly M&A Insider, which explores the global M&A market with respect to the numbers, movements and trends, as well as revealing the top financial and legal advisers – globally and across six regions (North America, Central and South America, Europe, Middle East and Africa, Asia-Pacific and Japan). The Monthly M&A Insider is brought to you by Merrill Corporation and Mergermarket.

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