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M&A mega deals push values to record highs in H1 2018

The value of merger and acquisition (M&A) deals worldwide is likely to reach a high in the first half of this year, with deals in January to April 2018 worth US $1.7 trillion and growth at “the fastest ever pace”, according to Deloitte. M&A deals of exceptionally high value are driving this peak, rather than an increase in the number of deals. In fact, the number of deals fell by a modest 1 per cent from H1 2017 and remained relatively stable with global deal volumes of 24,886.

Recent figures from Deloitte suggest that global M&A deal values are at their highest since the start of the millennium. Deloitte's Iain Macmillan explained that several factors are driving an increase in high-value deals, including:

  • companies have strong balance sheets and now have cash to spend;
  • we're also seeing robust debt markets;
  • digital technologies are transforming industries, driving the need to acquire digital expertise;
  • shareholder activism is pushing companies to restructure and spend on innovation.

Macmillan said: “While it is difficult to predict how long this flourish in mega-deals will continue, we are undoubtedly seeing an urgency to spend now. Companies have strong balance sheets matched with robust debt markets. This means those that did not do major deals in the last couple of years are eager to and don’t want to be left behind industry-wide transformations. We expect they will spend their cash assertively to combat economic uncertainties and challenges from disruptive technology. Another key driver is shareholder activism which is now spreading across the Atlantic to Europe. The primary demands are centred around portfolio restructuring and growth and innovation investments.”

Deloitte analysis shows companies spent $634 billion during the last three years acquiring disruptive technologies and using them as a strategic expedient to capture innovation-led growth.

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