Private Equity backed M&A has strongest year since financial crisis

private equity backed m&a

Excerpted below from Refinitiv’s 2019 merger data with a focus on private equity backed m&a. Highlights include:

  • Worldwide deal making down 3% from 2018 levels, sixth consecutive year to surpass US$3 trillion
  • US M&A increases 6% to four-year high; Europe deal making falls 25%; Asia Pacific M&A down 15%
  • Healthcare, Technology, Energy & Power and Industrials lead 2019 deals
  • Private Equity-backed buyouts up 4%, strongest year-to-date since Financial Crisis
  • Cross-border deal making down 25%; emerging markets M&A flat
  • Goldman Sachs maintains top spot for Worldwide, US, Europe M&A Advice; Morgan Stanley leads Asia Pacific & Japan

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Q3 2019 hedge fund letters, conferences and more

Quarterly Highlights Full Year 2019

Worldwide Deal Making Down 3% from 2018 Levels, Sixth Consecutive Year to Surpass US$3 trillion

Worldwide M&A activity totals US$3.9 trillion during year to date 2019, down 3% compared to the same period last year. The year to date tally marks the lowest YTD period for deal making in two years but marks the fourth largest year to date for M&A since records began in 1980 and the sixth consecutive year to surpass US$3 trillion. By number of deals, worldwide deal making has fallen 6% so far this year. Global M&A for deals greater than US$10.0 billion increased 28% compared to the same period last year, topping $1.0 trillion in deals for the first time since year to date 2015. Through the 30 th of December, fourth quarter 2019 M&A is up 28% compared to the same point during the third quarter of this year.

U.S. M&A Increases 6% to Four Year High; Europe Deal Making Falls 25%; Asia Pacific M&A Down 15%

Powered by 15 U.S. domestic M&A deals in the list of top 20 deals this year, M&A in United States has hit US$1.8 trillion so far this year, an increase of 6% compared to the same period last year and a four year high. European M&A activity hit US$742.1 billion, down 25% compared to last year and the slowes t period for deal making in the region since 2016. Asia Pacific M&A activity totals US$756.8 billion, down 16% from year to date 2018 and the slowest year to date period for M&A i n the region in five years. Deal making in theAfrica/Middle East region totals US$160.6 billion, more than double year ago levels and an all time high.

Healthcare, Technology, Energy & Power and Industrials Lead 2019 Deals

Deal making targeting the healthcare sector hit US$532.5 billion so far in 2019, up 26% compared to year to date 2018. M&A in th e technology sector totaled US$528.6 billion so far during 2019, up 4% compared to last year at this time. Deal making in the energy & power sector accounts for 13% of global M& A s o far this year with US$501.5 billion of deals announced and down 24% compared to 2018 levels. Industrials deal making accounts for 12% of year to date activity and is up 11% compared to a year ago.

Private Equity backed Buyouts Up 4%, Strongest year to date since Financial Crisis

Global private equity backed M&A activity totaled US$478.5 billion during year to date 2019, a 4% increase compared to last year and the strongest year to date period for global buyouts since 2007. Private equity deals account for 12% of overall M&A, on par with year to date 2018 levels. Private equity ba cked M&A targeting the United States reached US$198.9 billion so far during 2019, an increase of 3% compared to 2018 levels. European PE backed M&A is down 4% compared to 2 018 levels, while Asia Pacific buyouts have declined 13%, compared to a year ago.

Cross Border Deal Making Down 25%; Emerging Markets M&A Flat

Cross border M&A totaled US$1.2 trillion during year to date 2019, a 25% decrease compared to last year and the slowest period f or cross border deals since YTD 2013 (US$723.2 trillion). Cross border activity accounts for 30% of total M&A activity this year, down from 39% a year ago. The United States i nitiated 20% of all acquisitions abroad so far in 2019 with US$232.7 billion in deals, while China outbound acquisitions account for 4% of cross border activity. M&A involving emerging mar kets totaled US$980.5 billion so far during year to date 2019, flat compared to a year ago.

Goldman Sachs Maintains Top Spot for Worldwide, US, Europe M&A Advice; Morgan Stanley Leads Asia Pacific & Japan

Goldman Sachs maintained the top position for worldwide announced M&A advisory work during year to date 2019 boosted by the top ranking in the United States and Europe while Morgan Stanley took the top spot in Asia Pacific and Japan. Led by Evercore Partners, Centerview Partners and PJT Partners, 1 1 i ndependent firms placed among the top 25 global financial advisors during year to date 2019.

Worldwide M&A Volumes

Worldwide M&A Declines 3%

Worldwide M&A activity totals US$3.9 trillion during year-to-date 2019, down 3% compared to the same period last year. The year-to-date tally marks the lowest YTD period for deal making since 2017 (US$3.3 trillion) but marks the fourth largest year-to-date for M&A since records began in 1980. By number of deals, worldwide deal making has fallen 6% so far this year, a four-year low. Global M&A for deals greater than US$10.0 billion increased 28% compared to the same period last year, topping $1.0 trillion in deals for the first time since year-to-date 2015. Through the 30th of December, fourth quarter 2019 M&A is up 28% compared to the same point during the third quarter of this year.

U.S. M&A Up 6% to Four-Year High

United States year-to-date M&A activity hit US$1.8 trillion, up 6% compared to last year and is the country's strongest period for deal making since year-to-date 2015 (US$1.9 trillion). In terms of quantity of deals, YTD 2019 has produced nearly 11,903 deals; representing a 13% decrease compared to year-to-date 2018 (12,752) and a four-year low.

Europe M&A Falls 25%

M&A in Europe has reached US$742.1 billion so far this year, a 25% downtick compared to a year ago and the slowest period for European deal-making since 2016 (US$712.5 billion). There have been just over 15,300 European deals announced year-to-date, a 5% decline compared to last year and also the lowest YTD number of deals in five years. The value of European M&A during the quarter-to-date is down 11% compared to the same quarter-to-date period during the third quarter of 2019.

Asia Pacific Down 15%

Asia Pacific M&A activity for YTD 2019 totals US$756.8 billion, down 15% from year-to-date 2018 and the slowest period for M&A in the region in five years. Additionally, Asia Pacific accounts for 19.6% of worldwide merger activity, down from 22.3% a year ago.

Regional M&A Scorecard

 

M&A by Industry

M&A Review

Healthcare

M&A targeting the Healthcare sector hit an all time record US$532.5 billion during year to date 2019, up 26% compared to year ago levels. Nearly 65% of worldwide Healthcare deal making was concentrated in the Pharmaceutical sub sector, which totals US$345.1 billion, bolstered by Bristol Myers Squibb’s $93.4 billion bid for Celgene and Abbvie’s US$83.9 billion offer for Allergan, which rank as the first and third announced worldwide deals so far this year. By number of deals, Healthcare M&A is down 11% compared to last year at this time.

Technology

Deal making in the Technology sector accounts for 14% of global M&A so far this year with US$528.6 billion of deals announced, up 4% compared to last year and a four year high. M&A activity in the Software, Computers & Peripherals and Semiconductors sub sectors account for nearly two thirds of overall deal making in the sector and holds claim to the largest announced deal of the quarter, the US$33.7 billion bid for HP by Xerox.

Energy & Power

Deal making in the Energy & Power sector accounts for 13% of global M&A so far this year with US$501.5 billion of deals announced, down 24% compared to last year and a two year low. M&A activity in the Oil & Gas sector accounts for 48% of overall deal making in the sector and holds claim to the year’s sixth largest announced deal, Occidental Petroleum’s $54.2 billion bid for Anadarko Petroleum.

Industrials

Deal making in the Industrials sector accounts for 12% of global M&A so far this year with US$459.0 billion of deals announced, an increase of 11% compared to last year and the strongest year to date since records began in 1980. M&A activity involving the transportation & infrastructure and aerospace & defense sectors accounts for 55% of overall deal making in the sector and holds claim to the year’s second largest announced deal, United Technologies’ US$89.8 billion offer for Raytheon.

Buy-Side Financial Sponsor M&A

M&A Review

Global Buyouts Up 4%

Global private equity backed M&A activity totaled US$478.5 billion during year-to-date 2019, a 4% increase compared to last year. Private equity backed buyouts account for 12% of overall M&A so far this year, on par with year-to-date 2018 levels. By number of deals, global PE-backed M&A is down 2% compared to a year ago. This marks the strongest year-to-date for global LBOs, by value, since 2007.

U.S. Buyouts Up 3%

Private equity-backed M&A targeting the US reached US$198.9 billion so far during 2019, an increase of 3% compared to year-to-date 2018 levels (US$192.2 billion). Year-to-date financial sponsor activity in the United States is at the highest levels, by value, since 2007.

Technology, Real Estate & Energy Lead

Technology, Real Estate and Energy & Power PE-backed M&A accounts for 45% of year-to-date activity, up from YTD 2018 when the same three sectors accounted for 42% of activity. Private equity deal making in the telecommunications, retail and media & entertainment sectors have seen significant percentage upticks in activity compared to a year ago.

European PE-Backed M&A Down 4%

Private equity-backed M&A activity in Europe totaled US$129.6 billion, a decrease of 4% compared to the levels seen during the previous period in 2018 and the slowest year-to-date period for buyouts since 2017. Private equity M&A in Asia Pacific totals US$96.2 billion, a 13% decrease compared to a year ago.

Buy Side Financial Sponsor M&A Top Deals

M&A Review

Cross Border M&A

private equity backed m&a

Cross-Border Deals Fall 25%

Cross-border M&A totaled US$1.2 trillion during year-to-date 2019, a 25% decrease compared to last year. This marks the slowest period for cross-border M&A deals since 2013 (US$723.2 billion). Cross-border activity accounts for 30% of total M&A activity this year, down from 39% a year ago. Cross-border deal making accounts for the lowest percentage of overall M&A activity since 2009 (27.3%).

United States Most Acquisitive Nation

The United States initiated 20% of all acquisitions abroad so far in 2019 with US$233.3 billion in deals. China outbound acquisitions account for 4% of cross-border activity, while targets in the United States, the United Kingdom and Germany accounted for 43% of all cross-border acquisitions during year-to-date 2019.

Data via Refinitiv



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver