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M&A at a Glance (November 2015)

November 16, 2015 download PDF

Following contraction in August and September, M&A activity rebounded in October, as measured by total dollar value, while the marginal decline in overall number of announced deals continued.  In the U.S., the number of deals in October decreased by 6.21% to 830 deals, but this was offset by a robust increase of 105.52% in overall deal volume (as measured by total dollar value) to $239.23 billion and a corresponding increase in average deal size of 118.57% to $687.43 million.  Similarly, the number of deals globally decreased by 5.49% to 2,805 deals, but this again was offset by an 88.59% increase in global deal volume (as measured by total dollar value) to $545.21 billion - a record monthly high since the inception of this publication in April 2012.  Global average deal value in October also increased by 98.89% to $376.52 million.  Another significant driver of this uptrend in the M&A market was a rally in sponsor-related activity.  In sponsor-related activity, U.S. transaction volume increased in October by 572.75% to $121.23 billion and global transaction volume increased by 185.57% to $140.07 billion.  Strategic activity posted positive numbers, but had a relatively quiet month, with U.S. M&A volume (as measured by dollar value) increasing 19.96% to $118.00 billion and global transaction volume increasing by 68.77% to $405.14 billion.  Figure 1.

Computers & Electronics took over as the most active U.S. target industry by volume in October 2015 ($118.63 billion), followed by Finance ($44.06 billion).  However, as measured over the last 12 months, Healthcare continues to be the most active industry by volume ($526.08 billion) by a wide margin.  Computers & Electronics also maintained its lead as the most active target industry as measured by number of deals, both in October 2015 and for the last 12 months.  Figure 2.

Crossborder activity was mixed in October 2015.  Global crossborder activity increased, as measured by both overall deal volume and average deal value (by 71.13% to $189.63 billion and by 80.13% to $551.2 million, respectively), while the number of global crossborder transactions decreased slightly.  U.S. crossborder activity fared worse across-the-board.  Most notably, U.S. inbound deal volume decreased by 72.20% to $16.53 billion and U.S. inbound average deal value decreased by 73.95% to $209.28 million.  Figure 1.  Canada maintained its lead with respect to inbound U.S. crossborder activity ($3.64 billion), and the number of both inbound and outbound U.S. crossborder transactions (36 and 37 transactions, respectively).  Figure 3.

The incidence of tender offers as a percentage of U.S. public mergers decreased to 5.56% in October 2015, as compared to 22.60% over the past 12 months.  Figure 11.  The incidence of hostile offers as a percentage of U.S. public mergers was 18.20% in October 2015, as compared to 12.18% over the past 12 months.  Figure 12.  The percentage of cash-only U.S. public merger transactions decreased to 50.00%, as compared to 66.67% of deals in September 2015.  Figure 9.  Finally, the average target and reverse break fees in October 2015 were 3.38% and 5.73% respectively, remaining consistent with their respective 12-month averages.  Figure 7.

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