Monthly M&A Insider - Q3 2018

25 October 2018

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Growth in global deal activity slowed in Q3 amid concerns about the trade fights sparked by the U.S. against China and the European Union. The pace also slackened in part because PE buyout value declined for the second straight quarter, indicating that financial buyers may be struggling to find targets worthy of their dry powder. Despite the slowdown, however, year-to-date M&A value in 2018 remains ahead of the total from the same period last year. Energy, Mining & Utilities (EMU) led the way among sectors in terms of deal value, with five of the quarter’s top 10 transactions involving an energy company.

Key findings include:

• North America was the leading region in the quarter by value with a total of US$370.4bn.

• Energy, Mining & Utilities saw 320 deals valued at US$196.8n, up 60.9% by value compared to the same period last year.

• Deals valued at US$2.7trn were announced in the first nine months of the year, a 23% increase over the total value in Q1-Q3 2017.

Pacesetters: How Europe’s fastest-growing companies stay ahead of the pack

09 October 2018

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Mergermarket is pleased to present Pacesetters: How Europe’s fastest-growing companies stay ahead of the pack, published in association with Pinsent Masons. The report features an exclusive survey of 400 of Europe’s fastest-growing companies, revealing the three key traits that underpin the success of this diverse range of businesses:

  1. Collaboration brings opportunity: The fast-growing companies surveyed are excited about discovering new sources of opportunity and growth, whether through traditional modes of collaboration such as M&A activity or through increasingly looking at a broader range of options as they seek out access to new skills, tools and technologies. For example, the research suggests 40% of fast-growing companies regard alliances and joint ventures as one of the top three drivers of their growth over the past three years.
  2. Innovation speeds growth: These companies are convinced that innovation holds the key to unlocking new opportunity. For example, 58% of respondents regard technology as a top-three driver of their growth in the years ahead. Not all of these companies are to be found in the technology sector by any means, but all recognise that technology and innovation can be powerful enablers of growth. They are also investing heavily in product and service development, R&D and operational efficiency.
  3. Purpose proves powerful: Europe’s fastest-growing companies have a sense of purpose – they are driven by broader motivations than the desire to add sales or increase profitability simply for their own sake. Whether this is social purpose or a collective spirit within the business, Pinsent Masons’ research reveals that 76% of these companies believe they are 'purpose-led'.

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The New Wave of Protectionism

16 October 2018

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Ripple effects from the U.S. government’s recent tariff actions continue to impact the global economy. In turn, these volatile trade policies have forced dealmakers to reassess the risks of an increasingly political cross-border deal environment. But with M&A on pace to break last year’s value total, how will escalating protectionism affect investor sentiment heading into 2019? To find out how deal practitioners are responding to the changes in global trade, Mergermarket on behalf of Toppan Vintage spoke with six experts for their insights.

Points of discussion include:

  • Will U.S. tariffs benefit certain domestic players and thereby increase domestic deal activity?
  • Are private equity firms finding new opportunities amid recent protectionist measures?
  • Given the protectionist measures being put in place, what are the best avenues of cooperation or transactional activity with China at the moment?

Distressed M&A in India: A risk worth taking?

15 October 2018

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Mergermarket is pleased to present Distressed M&A in India: A risk worth taking?, published in association with Kroll.

Distressed M&A is becoming part of the patchwork of investment opportunities in India as the country’s Insolvency & Bankruptcy Code (IBC) sees hundreds of companies restructure or liquidate assets, creating abundant opportunities at discounted valuations. According to Mergermarket data, since 2017, these distressed deals have totalled US$14.3bn, a not so insignificant total and overall percentage of M&A in the country – and these deals are set to increase as more companies reorganize and sell off assets. 
 
In this issue, we look at key data trends and explore the distressed M&A environment, with a special feature interview with Kroll Managing Director and Head of South Asia Tarun Bhatia and Duff & Phelps Managing Director and India Country Leader Varun Gupta. 
 
Key highlights include:Key highlights include:
 
  • Sector opportunities: India’s industrial sector (specifically steel assets) have helped drive distressed M&A in the past 24 months, however, power, real estate and infrastructure companies could be prime candidates as these companies are restructured.
  • Investor groups: Foreign interest is growing, especially from international PE funds, although this has yet to translate into significant dealmaking, with most distressed deals conducted by Indian buyers or MNCs. 
  • Navigating the process and environment: Even experienced M&A practitioners must take a cautious approach to the India market. Inexperience, however, is no reason to avoid these types of deals altogether.

Q3 2018 Global M&A Report with league tables of legal advisors

05 October 2018

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Mergermarket, leading M&A data and intelligence provider, has released its Q3 2018 Global M&A Report with league tables of legal advisors. According to the new research, Q3 saw subdued M&A activity as growing geopolitical tensions and trade wars dampened spirits and caused corporates to pause over the summer. Highlights of the report include:

• Q3 saw the lowest quarterly value (US$ 703.2bn) since Q1 2016 (US$ 627.9bn) and 35.4% lower than Q2 (US$ 1.09tn).
• Domestic M&A increased by 30.6% on YTD 2017 to US$ 1.67tn – its highest YTD value on record.
• The Energy, Mining & Utilities (EMU) sector continues its winning streak, recording the fifth consecutive quarter over US$ 100bn.

““Following a frenetic first half of the year, Q3 saw subdued M&A activity as growing geopolitical tensions, trade wars and protectionism dampened spirits and caused corporates to pause over the summer”,” commented Jonathan Klonowski, Research Editor EMEA at Mergermarket.

Q3 2018 Global M&A Report with League Tables

02 October 2018

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Mergermarket, leading M&A data and intelligence provider, has released its Q3 2018 Global M&A Report with financial advisor league tables. According to the new research, Q3 saw subdued M&A activity as growing geopolitical tensions and trade wars dampened spirits and caused corporates to pause over the summer. Highlights of the report include:
 
• Q3 saw the lowest quarterly value (US$ 703.2bn) since Q1 2016 (US$ 627.9bn) and 35.4% lower than Q2 (US$ 1.09tn).
• Domestic M&A increased by 30.6% on YTD 2017 to US$ 1.67tn – its highest YTD value on record.
• The Energy, Mining & Utilities (EMU) sector continues its winning streak, recording the fifth consecutive quarter over US$ 100bn.
 
“With macro events playing a larger role in steering M&A this year, companies have continued looking closer to home instead of conducting high-profile cross-border deals. As tariffs introduced by the US and China and political protectionism creep further into deal-making considerations, advisors are having to contend with much harsher conditions,” commented Jonathan Klonowski, Research Editor EMEA at Mergermarket.
 
Goldman Sachs & Co led the financial advisor rankings by value having advised on 276 deals worth US$ 827.1bn up 42.4% by value compared to US$ 580.8bn.

Scanning the horizon: European M&A Outlook 2018

27 September 2018

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Mergermarket is pleased to present Scanning the horizon: European M&A Outlook 2018, published in association with CMS. This report provides invaluable insights into the M&A landscape in Europe in 2018, and the opportunities and challenges facing dealmakers.
 
Highlights from the report include:
 
  • M&A activity in Europe looks set to flourish, with nearly three-quarters of respondents considering a deal and 22% of respondents expecting dealmaking to increase significantly over the next 12 months, up from just 7% last year.
  • Overseas dealmaking also looks set to increase: 92% of respondents expect a higher volume of non-European acquisitions in the next year, while 64% expect an increase in aggregate inbound M&A value.
  • Financing conditions have stabilised in Europe since the crisis years, and nearly half of respondents expect conditions to improve in the coming months. Sources of financing have also diversified and allowed acquirers to take advantage of improved conditions.    
  • Political instability in European countries remains the greatest source of concern for dealmakers, with possible shifts in US policy and the volatility in global capital markets also posing risks. 

Monthly M&A Insider - September 2018

28 September 2018

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Global deal activity remains strong entering the fourth quarter of the year, against a backdrop of robust growth worldwide. In August, deals with an aggregate value of US$258.4bn were announced, putting the year-to-date total nearly on pace to match the record reached in 2015 of US$3.9trn. Dealmakers remain determined to put capital to work, with the cycle showing no clear signs of turning. While half of the global regions saw YoY increases in total value during August 2018, including North America and Asia (excluding Japan), Energy, Mining & Utilities led all sectors in terms of value thanks to an array of megadeals.

Key findings include:

• August witnessed US$258.4bn in global deals, up 6.8% by value compared to the same month last year.

• Energy, Mining & Utilities led global sectors by value with US$109.5bn, followed by Financial Services at US$26bn and Industrials & Chemicals at US$20.3bn.

• Globally, domestic deal values rose 10.8% in August while cross-border transactions declined by 2%.

Linking up: Vertical integration makes a comeback

17 September 2018

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Vertical mergers have been stealing some of the thunder from horizontal deals of late. As horizontal targets become harder to come by, some acquirers are focusing on companies up or down the supply chain from them—presenting both new opportunities for expansion and a new set of challenges.

To explore the drivers of recent vertical transactions as well as their potential pitfalls, Mergermarket on behalf of Toppan Vintage spoke with four dealmakers for their insights.

Points of discussion include:

  • In addition to the vertical megadeals, are vertical integration transactions sparking interest lower in the market?
  • Could vertical transactions be an effective strategy for private equity-owned platform companies?
  • How difficult is the due diligence process for a buyer in a vertical integration deal versus a traditional horizontal deal?

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