GLOBAL M&A DEAL ACTIVITY HOLDS STRONG IN THE FACE OF GEOPOLITICAL UNCERTAINTY, NEW REPORT SHOWS

  • Business services M&A accounted for 35% of global deals in 2017
  • The Indochina region is benefiting from India’s booming M&A market
  • New Global Acquirer Trends report highlights inbound deals across 6 major jurisdictions 

Despite a year of uncertainty and political upheaval, global mergers and acquisitions (M&A) activity and cross-border deal flow remained buoyant in 2017, according to a new report from Livingstone.

The latest issue of the international M&A firm’s report, ‘Global Acquirer Trends’, tracked inbound deals in Indochina, the UK and Ireland, the Americas, the Iberian Peninsula, DACH and the Nordic regions, which totalled 5,270 in the first half 2017.

Investment in the business services sector performed strongly and totalled 35% (1,838) of all M&A activity across the regions. Media and technology followed with 1,177 deals and industrial close behind with 1,135. The consumer and pharmaceutical sectors accounted for 717 and 403 respectively.

Business services was the busiest sector in the Nordics region, accounting for just over a third (34%) of total M&A and by far the most active sector in the Iberian Peninsula, accounting for 96 of all deals in the region.  Industrial M&A remained the lifeblood of the DACH region with 176 deals, but business services thrived with a particularly busy start to the year with 149 deals. 

UK and Ireland

Brexit had profound implications for buyers, but no major slowdown was reported in the first half of 2017 as the UK remained the leader of M&A in Europe, with 780 deals. Domestic activity in the UK was quieter, but international buyers continued to look to Britain when investing in Europe. Between them, Britain and Ireland saw 380 deals involving international buyers in the first six months of 2017, well ahead of the 331 in the DACH region and accounting for almost half (49%) of all deals.

The business services sector was a key driver for M&A activity in the UK and Ireland, with 311 deals. Consumer and industrial sectors set the pace with 134 and 128 deals respectively, with financial services following with 62 deals and the energy sector (48) also playing a meaningful part. However, media and technology (including computer software, services and internet and ecommerce services) was the next biggest contributor with 150 deals.

A 15% decline in the volume of transactions by US buyers, despite a favourable dollar to sterling exchange rate, may be indicative of a softening in the appetite for UK targets amongst oversees acquirers generally in the rest of 2017. 

Americas

 The US is not just the driver of M&A activity on its continent, but worldwide, accounting for 86% of the 3,019 deals seen in the Americas, substantially over half the five other regions reviewed. Donald Trump’s presidency in the US brought continued uncertainty for international buyers looking to North America, yet activity in sectors such as energy (242 deals) thrived.

Canada also saw sustained and significant activity, both domestically and inbound with 297 deals. US buyers were most active, with Americas making up almost 40% against about a quarter for Europe and a third from Australasia.

In most cases, deals in the Americas are domestic, with fewer than a quarter (24%) of deals coming from a foreign buyer and 735 of inbound deals (32%) were from elsewhere in the Americas. Despite the US government’s promise of tougher regulatory scrutiny of Chinese acquisitions, 46 deals originated from China.

Business services saw the most activity in North America, accounting for more than a third (1,057) of all deals, with financial services (259) and energy (242) among the busiest subsectors. However, total media and tech deals totalled 715 overall.

Indochina 

While there has been an undeniable slowdown in domestic M&A in China, international buyers into China are less deterred, as Asian activity continues and buyers from the US remain fairly constant. The Indochina region now benefits from India’s booming M&A market driving activity and it accounted for the majority of the 220 deals overall in the region in H1 of 2017, 141 of them inbound.

Foreign buyers remain the primary source for M&A in Indochina, with 64% inbound. In India, the US dominates, accounting for 39% of all deals in the area. Business services drove M&A activity in the region with 72 deals, with media and technology following with 64.

Jeremey Furniss, Partner at Livingstone commented:  

Lower volumes of domestic M&A in some jurisdictions are offset by far higher values and tempered by significant inbound activity. The result is that in every region covered, overseas buyers are playing a vital role in driving M&A.

“The renaissance seen in the business services sector across the globe is a trend we expect to continue, with media and technology also coming to the fore in the months to come. Both sectors saw impressive deal volumes and we can only expect this trend to continue as overseas buyers look to other regions for established models.”

“Interestingly, low confidence in China’s economy along with government efforts to move away from heavy industry are having a marked impact on M&A. Government efforts to restrict outbound acquisitions have been effective at reducing Chinese ability to complete transactions around the globe.

“While there is no denying M&A faces some challenging headlines, in most cases activity is proving remarkably robust. Whatever challenges there are in the market, buyers for now continue to face them with considerable confidence across the globe.”

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