The game show Let’s Make a Deal has got nothing on Wall Street in 2015. According to a July 14th report from investment services firm EY, mergers and acquisitions activity in the first half of 2015 was the strongest in recent memory. That said, EY is projecting the second half of the year will see even more corporate and private equity deals than the first half.
The report highlights that, for the first time in five years, over 50% of American firms surveyed are planning acquisitions in the next year. Moreover, the total deal value moved up a solid 55% to $1.143 trillion in the first two quarters of 2015.
Statement from EY Americas Vice Chair Rich Jeanneret on 2015 M&A activity
“Following an incredibly strong 2014, 2015 is shaping up to be a very good year for M&A,” noted Rich Jeanneret, EY Americas Vice Chair, Transaction Advisory Services. “US deal pipelines are full and companies are exuberantly seeking assets to grow and transform their businesses. After a period of intense focus on cost control and organic growth, CEOs are coming off the bench and doing significant deals, but they are keeping their eye on the ball and taking a disciplined approach to the deal frenzy.”
“The second half of 2015 will be exciting to watch as deal momentum continues,” Jeanneret continued.
Details on 2015 M&A activity
EY points out that several megadeals, especially in the life sciences sector, drove average deal values to near-record highs in the first half of 2015. There were 31 more than $10 billion deals signed in the first six months of 2015, with only 18 inked in the same period last year. This is also the highest number of deals ever announced in the first half of a year.
Of note, middle-market M&A activity also gathered steam in the first couple of quarters of the year, with 268 deals in the $500 million-$1 billion dollar range hitting the radar, an increase from just 257 deals in 1H 2014. The first half of the year saw 1,480 deals in the $100-500 million range, a notable increase from 1,364 in the first half of 2014. A recent EY survey highlights that 89% of U.S. companies are considering lower middle-market deals over the next 12 months. These deals are likely to involve a larger number of smaller, innovative acquirers looking for strategic fits following a substantial period of little to no deal-making.
Also of interest, the report also projects that private equity-related M&A activity will increase substantially in the second half of the year.