Lack of big-ticket deals hampers European dealmaking, as the US takes the lion’s share of global M&A activity


Mergermarket publishes its 2019 global report

Mergermarket, the leading provider of M&A data and intelligence, has published its 2019 report which revealed that global M&A activity last year was down 6.9% on the exceptional 2018 vintage to USD 3.33tn (across 19,322 deals), the sixth successive year at over USD 3tn. While this is up slightly on 2016 and 2017 levels, dealmaking slowed significantly in the latter part of the year, falling by 24.2% in the second half versus 1H19.

At USD 389m, the average size of deals with a disclosed value is up from USD 353m in 2018, and the second highest value on Mergermarket record behind 2015, a record year for global M&A. The past year also recorded 38 megadeals (>USD 10bn), also the highest number of such deals since 2015.

Hampered by sluggish Eurozone growth and Brexit, European M&A activity has suffered from a lack of big-ticket deals in 2019, posting a 21.9% year-on-year decrease to USD 770.5bn (vs USD 986.4bn in 2018). In contrast, the US market took the lion’s share of global M&A activity. Despite a dip in activity in 2H18, the US was home to 47.2% of global M&A activity in 2019, the highest share since 2001 and the highest post-financial crisis. While APAC was down 17.5%, the US market, up 1.5% on 2018, showed strong resistance throughout, supported by a relatively strong economy and a number of large domestic deals. Indeed, 15 of the top 20 deals of 2019 in value were the result of domestic consolidation among US-based corporations, another record.

The proportion of M&A deals with a private equity firm on either side of the negotiating table reached 27.5% in 2019, the third successive year over 25%. With a disclosed USD 556.4bn spent by private equity firms in 2019, buyout activity was not too far from the high levels of 2018 (USD 571.1bn). Sponsors continue to look for ways to deploy record amounts of dry powder, but after years of sustained buyout activity globally, the scarcity of quality family-owned assets has triggered a boom in take-private deals to USD 158.3bn (78 deals) in 2019, the highest value and volume since 2007.

Beranger Guille, Global Editorial Analytics Director at Mergermarket commented: “On the back of the longest equity bull market in history, and amid persistently low interest rates, corporates and private equity firms alike have ample cash reserves and appealing debt financing options at their disposal. The feeling that these conditions may not last and the desire to secure future growth are pushing valuations up.”

Other key data points include:

  • European outbound M&A has reached a combined USD 272.1bn across 1,024 deals, 28.3% above the 2018 figure, driven by deals such as the USD 27bn tie-up between London Stock Exchange and financial data company Refinitiv and LVMH’s USD 16.6bn offer for jewellery group Tiffany & Co. Steadier growth prospects across the Atlantic may partly explain why the US has received 66.4% of European outbound activity by value in 2019, up from 60.4% in 2018.
  • The China and Hong Kong area’s global M&A market share shrunk from 11.4% in 2018 to 8.8% in 2019, while deal value plunged 27.7% year-on-year to USD 294.5bn.
  • Deals with US-based players were particularly difficult. China and Hong Kong-based players spent only USD 5.7bn over 31 deals in the US in 2019, the lowest amount since 2011. In the opposite direction, US investment into China and Hong Kong reached USD 7.7bn across 31 deals, the lowest value since 2013.

Please click here to see the full global report for more insights.