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09 Apr, 2018

Global M&A Activity Hits Record

Global M&A Activity Hits Record
  • In the first three months of 2018, there were 3,774 deals globally, totaling $890.7 billion.
  • So far this year, there have been $393.9 billion invested in U. S. companies.
  • Domestic activity was also particularly strong in China.

Merger and acquisition (M&A) activity across the world has hit a seventeen-year-record high in the first quarter of 2018, according to a report by research firm Mergermarket.

In the first three months of 2018, there were 3,774 deals globally, totaling $890.7 billion, it said Wednesday. This was the strongest start to the year since 2001, when Mergermarket began recording the data, and represents an 18 percent increase in value compared to the first quarter of 2017.

«The extraordinary surge in dealmaking seen at the end of 2017 has carried through into 2018," Jonathan Klonowski, research editor at Mergermarket said in the quarterly report, citing pressure from shareholders and a search for innovation as the main drivers.

«Amazon's move into pharmaceuticals appears to have been a catalyst for dealmaking in health care-related areas with the CVS/Aetna deal announced in December and the Cigna/Express Scripts transaction this quarter," he added.

Amazon announced a partnership with J. P. Morgan and Berkshire Hathaway’s Warren Buffett in January to reduce health costs for U. S. employees. The move has sparked fears that the retail giant could enter and compete with traditional health care businesses. As result, the sector has consolidated to fight possible future competition from Amazon.

Cigna bought Express Scripts in a $54 billion cash-and-stock deal in early March. CVS also approved the acquisition of Aetna for about $69 billion in cash and stock last month.

Such deals have been particularly relevant in the U. S., where M&A activity during the first quarter of the year represented 44.2 percent of the total global share.

So far this year, there have been $393.9 billion invested in U. S. companies, according to the report. This represented a 26.1 percent increase from the same period a year ago. «Domestic dealmaking has been a key factor registering 952 deals worth $330.8 billion," the report said.

But it’s not only U. S. companies that seem to be consolidating in their own market. Domestic activity was also particularly strong in China, where firms spent $68.7 billion — this was the highest first quarter on record.

«Domestic M&A accounts for 85.2 percent of Chinese acquisitions in Q1 (first quarter) 2018, a significant increase from the 61.6 percent and 71.3 percent seen during 2016 and 2017," Mergermarket said.

Read more about M&A: DD Check List, Mandate F. A. Q.

Company Valuation: Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8

Some ideas about capital-raising strategies: Bringing Your Company Public, Exploring Alternative Capital-Raising Strategies, Refinancing and Minority Equity as Partial Exit Strategies, 5 Alternatives To IPOs, How to Raise Capital For a Company in Financial Troubles, 7 Private Equity Strategies

M&A forecasts: M&As In 2018, Last Year M&A Review and New Year Outlook, How to Raise Capital For a Company in Financial Troubles



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