Searching for solutions: Energy asset sales in Asia-Pacific

23 June 2016

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Depressed oil prices are putting pressure on the profit margins of some international oil companies (IOCs), leading to further cost reductions. This may result in more asset sales in Asia-Pacific in the year ahead. In the Asia-Pacific region, 2015 closed with 44 energy divestitures and asset sales worth a total of US$17bn, down from 2014’s US$30.2bn from 60 deals. Q1 2016 saw 11 divestments worth US$1.3bn.
 
Eversheds, a leading international law firm, has teamed up with Mergermarket to trace the shifting trends in the Asia-Pacific energy sector in Searching for solutions: Energy asset sales in Asia-Pacific, the second issue in a newsletter series.
 
This thought-leadership publication includes an exclusive interview with Eversheds partners Charles Butcher, Corporate, and Jae Lemin, Banking, presenting expert insights on considerations pertaining to timing, preparation and risks in Asian oil and gas divestitures and asset sales.
 
Highlights from Searching for solutions: Energy asset sales in Asia-Pacific:
 
  • According to Mergermarket data, Oil and gas exploration and production assets accounted for almost half the asset sales in value and 42% in volume from 2014 to Q1 2016.
  • The clean energy sub-sector saw the region’s second-highest rate of asset sale and divestment activity from 2014 to Q1 2016, accounting for 34% of deal volume and 17% of value in the sector.
  • Across the Asia-Pacific region, Australia accounted for 54% of energy asset sale and divestiture values and 30% of volume from 2014 to Q1 2016. In second for energy divestitures and asset sales was China, which accounted for 24% of the region’s total divestment volumes and 17% of value.

Mid-Market M&A: Deal Environment for Sellers

23 June 2016

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As volatility continues in the world economy, the North American mid-market has seen a dip in M&A activity. In the first five months of 2016, the value of mid-market deals fell 10% to US$56.9bn, while volume dropped to 655 deals, from 896 a year earlier. After several years in which sellers could dictate terms, it has become a buyer’s market in many sectors.
 
And yet, selling opportunities will continue to arise. The question for sellers is: How can a company best position itself in this environment?
 
Mergermarket, on behalf of Firmex, a virtual data room provider, interviewed four experienced mid-market dealmakers to discuss the key steps business owners should take to optimize value.
 
Points of discussion include:
 
  • Sectors in which favorable conditions persist for mid-market sellers.
  • Unique challenges that activists present to the mid-market and how mid-market companies can best respond to activist pressure.
  • Alongside valuations, which other major factors sellers should consider when evaluating buyout offers.
  • Advantages and disadvantages of selling to a private equity firm vs. a strategic

Monthly M&A Insider – June 2016

24 June 2016

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Global M&A activity continued at a deliberate pace in May, continuing this year’s slowdown, with 1,054 deals worth US$224.5bn – a 39.7% decrease in value and 356 fewer deals than the corresponding period of 2015. Private equity activity has been livelier, however: In the first two months of Q2 2016, there were 367 buyouts worth US$72.2bn, a 23.9% increase in value year-over-year.
 
Highlights from the report include:
 
  • Energy, Mining & Utilities (EMU) was the top sector in May 2016, with 80 deals worth US$40.5bn, a 66.8% increase in value despite 16 fewer deals compared to a year ago.
  • North America was the region with the highest market share of global M&A by value (48.1%), with US$108bn from 351 deals. Conversely, Europe had 51 more deals, yet less than half the value of North America (US$46bn).
  • Business Services was the second-place sector in May and had the top deal of the month: US-based Quintiles Transnational Holdings’ acquisition of IMS Health Holdings for US$12.9bn

Market Spotlight: Challenges for Private Equity

30 June 2016

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Welcome to the June Venue® Market Spotlight.
 
RR Donnelley commissioned Mergermarket to interview professionals based in the US, Europe and Asia-Pacific to gain insight on their opinions regarding private equity challenges over the next 12 months.
 
As the appeal of private equity continues to rise among investors, competition for fundraising and deals is at an all-time high. Yet regulatory pressures have become intense and the world economy remains on shaky ground – especially after the Brexit vote on June 23.
 
This month’s Venue® Market Spotlight examines the challenges facing the private equity industry over the coming year. Half of all respondents said intense competition from strategics will be one of the biggest barriers to PE success, while 33% said tight profit margins at portfolio firms will be a major issue as well. Europe is expected to have the least attractive valuations for PE over the coming year, 88% of respondents said.

Testing the Defenses: Cybersecurity due diligence in M&A

12 July 2016

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As the importance of cybersecurity rises in the corporate environment, it has become vital for potential acquirers to assess the IT systems of M&A targets. Companies are increasingly aware of the need for cybersecurity due diligence, yet they often lack the proper personnel to conduct thorough analyses, according to a new study by West Monroe Partners and Mergermarket, Testing the defenses: Cybersecurity due diligence in M&A.
 
West Monroe Partners, a North American business and technology consulting firm, commissioned Mergermarket to interview North America-based senior M&A practitioners to provide insight on the complexities and challenges of cybersecurity due diligence in the acquisition process.
 
Highlights from the report include:
 
  • 80% of respondents said that cybersecurity issues have become highly important in the M&A due diligence process.
  • More than a third (40%) of acquirers said they had discovered a cybersecurity problem at an acquisition after a deal went through, indicating that standards for due diligence remain low.
  • 70% of respondents said compliance problems are one of the most common types of cybersecurity issues uncovered during due diligence, while 40% said a lack of comprehensive security architecture is also common.
 
See more content from West Monroe here.

Dealmakers’ Guide

14 July 2016

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In a global environment fraught with economic uncertainty and political change, companies looking to acquire need help from their adviser pool like never before.
 
M&A activity worldwide stood at US$4.28tn in 2015, an increase of 30.4% on the previous year, but has dipped so far in 2016. With a lower number of deals, the stakes are even higher for those that do get done. Understanding what is important to your clients and how you can best serve them is essential to being an effective adviser.
 
With this in mind, RR Donnelley, in association with Mergermarket, presents the Dealmakers’ Guide, a snapshot into the minds of 75 global corporate dealmakers.
 
Key findings include:
 
  • Corporates feel that due diligence and formulating the deal rationale are the most important steps when it comes to achieving deal value. Respondents noted that navigating these phases well helps lead to more informed decision-making down the line.
  • Corporates mainly define M&A success by looking at sales growth metrics, with almost three quarters using it as a primary success measure.
  • An adviser’s past M&A record is the main factor that influences corporates when choosing one, with 75% choosing it as one of their top two considerations

Market Spotlight: M&A Post-Brexit

28 July 2016

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Welcome to the July Venue® Market Spotlight.
 
Against a backdrop of sluggish global growth and diminished M&A activity this year, Brexit adds further uncertainty to the macroeconomic picture. Before the dust settles, many corporates will likely take a “wait and see” approach when it comes to dealmaking, both in Europe and beyond.
 
To gain insight on the effects of the UK vote on M&A, RR Donnelley commissioned Mergermarket to interview professionals based in the US, Europe and Asia-Pacific. Respondents are broadly bearish when it comes to Brexit’s impact on dealmaking, yet they believe opportunities will present themselves for risk-hungry buyers.
 
Almost two-thirds (64%) of respondents said global M&A activity will decline further due to Brexit, while 40% believe private equity activity will decrease as well. Nearly three-quarters (72%) said they think Brexit will cause a major downturn in Europe and/or the UK, but not in the rest of the world.

Slow but steady: US M&A H1 2016

29 July 2016

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Mergermarket is pleased to present Slow but steady: US M&A H1 2016, in association with White & Case. The report looks at the key factors and trends driving dealmaking in the United States, and what might be in store for the rest of 2016. After two blockbuster years for US M&A, the market reverted to historical norms for the first half of 2016.

Monthly M&A Insider – July 2016

01 August 2016

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Global M&A activity experienced a decline following the record highs of last year, with 7,794 transactions worth US$1.3tn, a 26.8% decrease in value and 936 fewer deals compared to H1 2015. Political action and uncertainty proved a significant influence around the globe throughout H1 2016. Actions by US regulatory agencies upset two potentially high-value transactions in Pfizer/Allergan and Halliburton/Baker Hughes. Similarly, in Europe, potential implications related to the “Brexit” vote added uncertainty to that region’s overall dealmaking activity.
 
Highlights from the report include:
 
  • North America was again the top region for M&A, capturing 44.8% of global market share by value for a total of US$594.5bn.
  • The Canadian market expanded its appetite for targets in the US as well as Central and South America – totaling US$32.6bn for 17 businesses – specifically in the Energy, Mining & Utilities (EMU) sector.
  • China National Chemical (ChemChina) Corporation’s US$45.9bn bid for the Switzerland-based biotech company Syngenta represented H1 2016’s top deal.

Deal Drivers EMEA Half-Year 2016

11 August 2016

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Mergermarket is pleased to release the half-year edition of Deal Drivers EMEA, in association with Merrill Corporation.
 
This report provides an in-depth review of M&A activity for the half-year of 2016, offering key insights into how announced deals for H1 2016 will impact M&A for the year ahead.
 
Highlights from the report include:
 
  • Transatlantic activity dipped in the first half of 2016, partly in anticipation of the UK referendum and November’s US presidential election. Inbound deals from North America into Europe fell to 297 deals during H1 2016, down 18% compared to H1 2015, while deal value also slumped by 27% to €46.8bn. The incumbent Obama administration also became more outspoken against tax inversion deals which made larger corporates more hesitant to look for tax domiciles in Europe. This had a particular effect on the pharma sector.
  • Private equity firms have become increasingly cautious with fund allocation. Compared to H1 2015, PE buyout value was 33% lower (€38.6bn) despite an 8% rise (559) in deal volume in H1 2016.
  • The prolonged depression in crude oil is expected to create opportunities within the Gulf economies. Most notably, Saudi Arabia recently moved to ease restrictions on foreign ownership.

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