Present Perfect, Future Tense: Exploring M&A in 2018 and Beyond

November 2018

Welcome to our first M&A Overview, produced in association with Mergermarket. In this report, you’ll find key M&A data for 2018 to the third quarter, analysed by region and sector, underscored with insights into what is driving corporates and private equity houses to seek out transactions and where they see most opportunity.

So far this year, M&A activity has built on the strong performance seen in 2017, with values in particular reaching heights not seen since before the financial crisis. High liquidity, low interest rates, technological transformation, rising corporate profitability and strong private equity fundraising are all converging to create perfect conditions for deal-making activity globally.

At a time of increased geopolitical uncertainty and rising protectionism in some key markets, our report points to an increase in domestic deal-making activity as companies and investors look closer to home for M&A opportunities. However, cross-border deals continue to make the headlines as some of the largest transactions of the year so far, including Takeda’s US$79.7bn acquisition of Shire and Comcast’s US$51.5bn purchase of Sky. These blockbuster deals demonstrate the boldness that characterises many corporate strategies today.

Perhaps unsurprisingly, given the rapid advancement of disruptive technologies with applications across all sectors, technology, media and telecoms (TMT) is one of the most active sectors for M&A by value, coming in behind energy, mining & utilities (where transactions tend to be much larger in size). And while the technology giants such as Microsoft, Google and Apple are clearly among the most active acquirers in this space, businesses in other sectors are increasingly turning to technology deals to transform their operations, customer offerings and, in some cases, even their business models.

Healthcare-related deals also account for a large share of deal value as large incumbents seek ways of addressing global health challenges, increasing efficiency and improving patient outcomes. These trends are set to continue through 2019 and should underpin continued M&A activity. However, we expect deal-making to advance in a less even pattern by region than has been the case over the last two years. Protectionism and shifting policies are already having an impact on Chinese and US outbound M&A, while the continued uncertainty around Brexit looks set to dampen some appetites for UK assets, in particular, as the March 2019 deadline approaches. On the other hand, continental Europe may well attract more investor attention and high growth in India, and economic and corporate governance reforms in Japan suggest these markets will also account for an increasing share of global M&A.

We hope you find this report informative and insightful.