Michael B. Kennedy, VP Sales DataSite, Merrill Corporation | May 23, 2017
Despite an optimistic start to 2017 with the strongest January on record, the deal market faltered throughout the rest of Q1. In April, we saw more of the same. Overall deal volume was down by 530 deals on April 2016, however value inched higher with US$229.96bn worth of deals versus US$221.4bn. This volume decline came against the backdrop of political unrest that shows few signs of being resolved. Indeed, uncertainties over Brexit, the policies of the Trump administration, and the lead-up to elections in France and Germany have provided the dealmakers with reason to pause. However, this caution is producing fewer deals of higher valuation as the number of megadeals also increases.
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North America showed the greatest increase in deal value of all regions for April, buoyed by five megadeals worth more than US$4bn each, making up half of total deal value for the month. One deal was April’s largest transaction: US-based Becton Dickinson’s US$23.4bn purchase of rival medical supply manufacturer CR Bard.
Private equity also took a cautious approach to activity in April, with buyouts down 17% in value compared to the same period in 2016 and 89 fewer transactions. The value of exit activity rose, however, with 149 sales valued at US$42.5bn last month, compared to 168 exits worth US$26.6bn a year ago.
While activity has slumped somewhat with global deal volume falling from 5,881 deals last year to 4,924 deals, aggregate transaction value to-date is up to US$941.1bn, an 8.7% increase compared to 2016. Contributing to this were a number of positive performances in the market:
• On a sectoral basis, Consumer and Pharma, Medical and Biotech deal activity were strongest in April – with 121 consumer deals and 73 healthcare deals.
• Regionally, North America was the only market to post an increase in year-on-year deal value at US$116.5bn, while the rest of the globe saw values decline. Surprisingly, crossborder activity also enjoyed a value increase to US$85.5bn.
• Despite having the slowest month for 2017 so far, the average deal value in the Middle East and Africa reached the highest on Mergermarket record at US$401m.
Predictions that 2017 could be a bumpy year seem to be coming to fruition as continuing volatility and uncertainty plague markets across every region.
The Monthly M&A Insider 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.)