Deals decline

BY Richard Summerfield

Despite favourable macroeconomic conditions and abundant cash levels among keen acquirers, both the number of reported M&A transactions and deal value worldwide declined for the second consecutive year in 2017, according to Wilmer Hale’s ‘2018 M&A Report’.

The number of reported M&A transactions worldwide dropped by 10 percent, from 59,544 deals in 2016 to 53,854 in 2017. Global M&A deal value decreased 9 percent, from $3.59 trillion to $3.26 trillion. The size of the average deal in 2017 was $60.6m, up slightly from the $60.4m in 2016, but trailing the $69.4m average recorded in 2015.

Deal volume in the US fell 13 percent from 21,666 transactions in 2016 to 18,957 in 2017. Deal value also declined by 15 percent, falling from $2.24 trillion to $1.91 trillion. Average deal size fell 3 percent to $100.9m in 2017, from $103.6m in 2016.

There was also a 7 percent fall in deal volume in Europe last year, with 20,721 transactions recorded, down from 22,305 in 2016. Total deal value fell 15 percent from $1.41 trillion to $1.19 trillion. The average deal size recorded also fell by 9 percent to $57.4m in 2017, from $63m in 2016.

The Asia-Pacific region also saw a 9 percent decline in deal volume with 16,926 transactions recorded in 2016 falling to 15,330 in 2017. Total deal value dropped 16 percent, from $1.25 trillion to $1.05 trillion. Average deal size fell 7 percent, from $73.8m to $68.5m.

Deal volumes also declined across a number of key sectors, including technology, life sciences and telecommunications. In the tech space fell, 2017 saw 9016 deals, a fall from 9103 deals in 2016. Deal value also fell for the second year running, declining 35 percent from $522.1bn to $338.4bn.

The financial services industry was the best-performing sector in 2017. Deal activity was up 3 percent to 3042 transactions record last year. Global deal value in the sector did fall by 18 percent, however, from $329.1bn to $271.3bn. Average deal size fell 20 percent, from $111.4m to $89.2m.

Following two consecutive years of declining deal volume and value, Wilmer Hale believes that 2018 could reverse the trend, despite the presence of some prevailing headwinds. A number of key factors should positively influence dealmaking, including improved economic stability and growth in most major economies. In addition, high levels of cash are being held by both strategic and private equity acquirers . Fundraising among private equity firms has also grown for the fifth year running and they are facing increasing pressure to exit investments and return capital to investors.

Report: M&A Report 2018

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