In the first half of 2017, the number of global M&A deals announced saw a 2% increase from H1 2016, at $1.6 trillion. 22,752 deals were announced globally, which is down 4% from last year. The number of deals worth more than $1 billion rose by 14% (275 deals), but remained flat in value at $946.9bn. These statistics reflect an H1 trend of acquirers moving away from mega-deals, as U.S. policies on tax and regulations have yet to materialize, resulting in an increase in middle market deals.
Q2 saw a steady increase of 6% from Q1 in global M&A deals announced. Announced deals totaled $822.6bn compared to Q1 which totaled $775.8bn. However, Q2 2017 saw a dip from Q2 in 2016 at a 6% decline ($872.4 bn in 2016).
Cross Border Takes the Cake
Cross Border activity saw its highest value of deals announced since 2007 at a staggering $630.9bn valuation, and accounted for 40% of overall M&A globally. Much of this activity has occurred in Europe as they are recovering from the economic uncertainty of Brexit in 2016. Due to the U.S. political climate and the Chinese government cracking down on Chinese outbound M&A, European assets have been the most attractive since before the 2008 U.S. Recession.
Compared to H1 of 2016, China outbound M&A fell 49% ($64.3bb), U.S. deals announced fell 16% ($583.8bb), and M&A deals in Europe saw in increase of 33% ($449bb). European targets accounted for 25% of global M&A for H1 of 2017, the highest since 2014. Canadian M&A saw an increase of 14% at 92.3 billion, and sub-Sahara African M&A saw its highest H1 since 2013 at $18.1 billion. Emerging Markets M&A saw a dip from H1 2016 in both value, down 14.7% at $458 billion, and volume, down 13.6% at 7,378 deals.
U.S. Market Still Hopeful
Although U.S. activity in H1 was not impressive, the M&A community is still optimistic that the U.S. will return with a surge in H2. Available capital at low interest rates creates appealing financing markets, earnings for companies remain strong (although valuations can be high), and the U.S. Government is still actively looking to materialize reforms that will be beneficial for M&A. For these reasons, many bankers at leading firms remain hopeful in the U.S. market’s ability to bounce back in H2.
Energy/Power, Real Estate, and Industrials were the most active industries in H1. Energy and Power saw a 29% increase in value from H1 2016 at $240.6 billion. Real Estate saw an increase in value by 8%, and an increase in volume by 7%. Industrials and Healthcare accounted for 12% and 10% of overall M&A activity, respectively. On the other hand, the two industries that saw the steepest declines include Materials and Technology at -%46 and -34%, respectively.2
League Table Standouts
There were some notable shifts in H1 2017 in terms of market share and deals announced. For Bulge Brackets, Goldman Sachs stays at the top of the chart, while Citi jumps to 2nd from 6th last year. There were also some strong efforts from boutique firms including Moelis who rose at 16th (41st in 2016), Perella Weinberg at 17th (65th in 2016), and PJT Partners at 22nd (57th in 2016). While Morgan Stanley, Bank of America Merrill Lynch, Credit Suisse, Barclays, and UBS all have taken a slight step backwards.1
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