Matt Ellis | Vice President of Advisor & Private Equity Sales | Merrill Corporation | January 25, 2018
December deal making helped to give the year’s M&A activity a much-needed final boost, with five mega deals contributing almost $200 billion in value to the monthly tally – compared to two mega deals in December 2016 valued at $25.7 billion. This surge in December gave an overall boost to the market but there was still a year-on-year (YoY) decline in activity. A total of 18,443 deals worth $3.2 trillion were announced globally during 2017, reflecting a 3% drop in value YoY. As part of the overall annual decline, cross-border activity also dropped globally in 2017, though only by a small margin. Cross-border deals were valued at $1.3 trillion – a 0.1% drop in comparison with 2016. Domestic deals fell 5% on the previous year, dropping to $1.8 trillon.
The top performing sector in 2017 was Energy, Mining & Utilities (EMU) with 1,555 deals valued at $543.7 billion. Interestingly, none of the top 10 deals for the year were from this sector. The biggest deal was the $18.8 billion acquisition of US-based Energy Future Holdings Corporation’s indirect 80% ownership in Oncor Electric Delivery Company by Sempra Energy. Industrials & Chemicals was the second most valuable sector, with a total of $394.9 billion from 3,447 acquisitions, and Consumer was ranked third, where 2,099 deals were announced worth US $380.6 billion.
The biggest deal of the year came in December when multinational media company Twenty-First Century Fox was purchased by fellow entertainment conglomerate the Walt Disney Company for $68.4 billion. This was followed closely by the acquisition of US managed healthcare company Aetna by CVS Health Corporation for $67.8 billion.
Private equity exhibited an exceptionally strong performance in 2017, with buyouts and exits well exceeding total deal values for 2016. Full-year 2017 saw some 3,297 buyouts worth $511.7 billion, an increase of 9.7% in value on full-year 2016, and 2,213 exits worth $536.3 billion, a 2.2% increase in value versus 2016’s total.
Of the year’s top 10 deals, half of them were driven by US-based buyers. Indeed, North America was the greatest contributor to global M&A activity, with 43.4% of market share. While the region took the top spot, aided by the December megadeals, both value and volume were down in the region compared to 2016.
From a regional perspective, Europe enjoyed an increase in deal value YoY from $797.4 billion in 2016 to $929.3 billion in 2017, while rises in both volume and value were experienced in Asia (excluding Japan) and Central and South America. The Asia-Pacific region reached its second-highest annual M&A value on Mergermarket record (since 2001), indicating that this market remains attractive for dealmakers despite a drop in global activity.