Fact: 2017 was the biggest ever in terms of numbers of mergers and acquisitions across the globe.
Data from Thomson Reuters put the total value of international transactions at $3.5 trillion, with over 50,000 deals done.
Mergermarket have also released their 2017 report which fairly closely mirrors Thomson Reuters’ data.
The difference between the two surveys is that Mergermarket looks at deals over US$5 million (about 18,400 transactions), whereas Thomson Reuters’ data looks at deals done over US$1 million.
Mergermarket shows four consecutive years of deals done over US $5 million mark – totaling over $3 trillion. 2017’s total was just under 2016’s, in both total value ($3.15 tn / $3.26 tn) and number of deals (18,433 / 18,592).
Delving into these reports brings up some interesting information.
Firstly, they tell us that the record number of deals can be largely attributed to the small business sector, i.e, between US$1 million to US$5 million in transaction size. The increase may be due to the difficulty for businesses of all sizes to grow organically.
According to the MD of UK banking & broking at Citigroup, Jan Skarbek, this trend is likely to continue in 2018. He said: “Organic growth is very difficult in this environment and staying still is not an option for many companies. … I think there will be more deals next year, despite the geopolitical uncertainty.”
Secondly, deals over $5 million may only represent about one third of all deals but account for 90 per cent of transaction value. No surprise there, but it’s an interesting statistic that indicates the size of some of the mega deals.
The top three were all US deals:
1. Disney’s acquisition of Fox’s entertainment assets for US$ 68.4 billion
2. The merger of drugstore giant CVS with healthcare insurer Aetna (US$ 67.8 billion)
3. The merger of telecom operator CenturyLink with Level 3 Communications, the service provider (US $ 34 billion)
However US’s influence on global value dropped from 45.5 per cent in 2016 to 40 per cent in 2017, mainly due to a resurgent Europe with its rising GDP. Europe’s share increased to 29 .6 per cent in 2017 from 25 per cent in 2016 and 23.1 per cent in 2015. Global M&A actually dipped slightly -3.2% by value – to US$ 3.15tn in 2017.
Thirdly, Thomson Reuters data reveals that UK domestic deals actually doubled in value from £25 billion in 2016 to £50 billion in 2017. The number of deals between UK companies jumped 13.5 per cent from 1480 to 1681 – the highest level in nine years.
IK deals included shopping centre operator Hammerson buying up rival Intu Properties for £3.4 billion and The included bookmaker GVC’s and shopping centre owner Hammerson’s £3.4 billion acquisition of smaller rival Intu Properties.
UK domestic deal-making contrasted with drops in both outbound and inbound UK M&A volumes of around 11 per cent. Future sales of UK technology and defence companies are likely to draw the scrutiny of the UK government who are stepping up vigilance.
Lastly, there is one thing that is currently driving mergers and acquisitions across all sectors. That is next wave technology. People are rapidly changing the way they consume products, services and media.
The technology sector itself hit the highest ever deal count since Mergermarket began its annual survey in 2001. Business buyers and investors are rabidly hungry for the latest developments, whether it be blockchain, autonomous vehicles or IoT.
All of which promise a very busy and interesting 2018 for the business acquisition market.