As we brought the year 2019 to an end, we now turn back to look at how the global M&A market performed and what were the trends witnessed.

M&A activity in 2019 witnessed a downturn of 6.9% when compared to 2018. However, when compared looking at the observed period one can notice that both 2018 and 2015 look like outliers. Meanwhile other years are in line with results achieved in 2019. While this is above 2016 and 2017 levels, dealmaking slowed down significantly in the latter part of the year, with the second part of 2019 recording a 24.2% fall in value versus the first half.

When looking at the regional breakdown the US took the lion’s share. Despite a dip in activity which occurred in the second half of the year, the US was home to 47.2% of global M&A activity in 2019, the highest share since 2001. At the same time European activity fell 21.9% YoY in value, while APAC was down 22.5%, the US market, showed resistance and grew by 1.5% on 2018, supported by a relatively strong economy and a number of large domestic deals.

Global M&A Quarterly Breakdown Trend (USD bn)

According to Mergermarket, 15 of the top 20 deals of 2019 in value were the result of domestic consolidation among US-based corporations. As a result, the largest deal of the year also occurred in the US when United Technologies’ merged with Raytheon in a deal worth USD 88.9bn. Note that this was also the ninth largest deal on Mergermarket record.

Another important trend is that deals are getting larger. 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. At USD 389m, the average size of deals with a disclosed value is up from USD 353m in 2018. The past year also recorded 38 megadeals (>USD 10bn), also the highest number of such deals since 2015. Finally, at 11.6x EV/EBITDA, the global median PE multiple across sectors, is also near the highs of 2017 (11.7x).

Turing our attention to the sector breakdown, Industrials and chemicals recorded the highest deal value in 2019 with a total value of EUR 523.8m.

Global Sector Breakdown Trend (USD bn)

Private Equity Plays Important Role Again

The proportion of deals with a private equity firm on either side of the negotiation table has reached 27.5% of all global M&A transactions in 2019, the third successive year above 25%. With a disclosed USD 556.4bn spent by private equity firms in 2019, buyout activity is not too far from the high levels of 2018 (USD 571bn). 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 in 2019, the highest value since 2007.