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Spike in Global M&A Deal Value Continues Megadeal Trend

Adam Pang, Vice President, DataSite, Merrill Corporation | April 28, 2017

The April edition of the Monthly M&A Insider – which is developed by Merrill Corporation and Mergermarket – looks back at the first quarter of 2017. During this time, we have seen a spike in global M&A deal value when compared to Q1 2016, but a sharp decline in volume. This continues the trend of an increasing number of megadeals that started in Q4 2016 and finished off Q1 on a high. After a strong January, and a slightly faltering February, market performance in March regained momentum.

Total deal value rose 8.9% versus Q1 2016 to reach US$678.5bn, yet the number of deals dropped from 4,326 to 3,554. We still see many companies taking a wait-and-see approach to M&A due to regulatory swings in the US, Europe and Asia. Chinese buyers in particular have slowed activity, thanks to increased regulatory scrutiny from the Chinese government, while inbound European M&A has also backed off.

Political uncertainty in Europe appears to have affected activity from international dealmakers pursuing deals in the region, while North American dealmakers have actually increased their activity across the pond, increasing their Q1 deal value by 16% in 2017 compared to Q1 2016.

Despite a first quarter of mixed activity, final Q1 figures were boosted by strong dealmaking in January and March. Among the highlights were:

Energy, Mining and Utilities posted the strongest performance, with M&A transactions in this sector making up 24.1% of all value for the quarter. Two of the three largest deals for the quarter involved pipeline operators, helping to launch the sector to the top spot.

The number of announced Consumer megadeals reached record heights, with three deals valued over US$10bn, resulting in the highest valued Q1 for this sector since 2008 (395 deals, US$136.1bn).

Private equity buyout activity mirrored overall deal trends with a rise in value over volume, while exits decreased overall.

Three of the quarter’s top 10 deals were announced in March, the largest of which was Intel Corporation’s US$14.7m bid for Mobileye, a technology designer for driverless cars.

Looking ahead, it is likely that we will see a continuation of cautious resilience from global dealmakers. Buyers in China and Europe in particular will continue to tread carefully as dealmakers come to terms with new regulations and the impact of Brexit negotiations. Meanwhile, in North America, the impact of the Trump administration seems to have done little to deter activity.

Each month, 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). Download the complete report today.

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