M&A activity in August 2016 declined across most metrics, both in the U.S. and globally, as large-value transactions appear to have taken a summer hiatus. In the U.S., average deal value declined by 30.4% to $360.3 million, weighing down total deal volume by 17.3% ($104.85 billion), despite an 8.7% increase in the total number of deals to 697. The global market fared worse, declining by approximately 34% in both average deal value and total deal volume (to $140.9 million and $220.49 billion, respectively), and by 4.1% in the total number of deals, reaching a new 12-month low of 2,797 transactions. Significant declines in average deal value occurred across the board to both sponsor-related and strategic transactions, both in the U.S. and globally. In U.S. strategic activity, deal volume declined by 23.3% to $68.39 billion, even though the number of deals increased by 7.4% to 563. U.S. sponsor-related deal volume declined by 3.3% to $36.46 billion, even though the number of deals increased by 14.5% to 134. Globally, strategic activity declined across all metrics (deal volume declined by 36% to $171.46 billion, and the number of deals declined by 3.2% to 2,519). Similarly, global sponsor-related activity underperformed, declining by 25.8% to $49.03 billion in deal volume and by 11.7% to 278 in number of deals. Figure 1 and Annex Figures 1A-4A.
Crossborder activity also declined in August 2016, with the U.S. experiencing less-pronounced declines, as compared to the global market. Inbound U.S. deal volume declined by 11.1% to $25.92 billion, while the number of deals remained flat at 112. Outbound U.S deal volume increased by 6.3% to $10.12 billion, while the number of deals increased by 19.3% to 130. Globally, both average deal value and total deal volume for crossborder deals declined by 49.4% to $61.31 billion and $177.7 million, respectively, and the number of deals declined by 2.0% to 678, reaching a new 12-month low. Figure 1 and Annex Figures 5A-7A. Canada regained its position as the leading country of origin for inbound U.S. activity in terms of deal volume, both in August 2016 ($6.42 billion) and for the last 12 months ($93.14 billion), and maintained its position as the leader in inbound number of deals (34 in August 2016 and 428 in the last 12 months). Canada also retained its lead in number of outbound deals, both in August 2016 (31) and in the last 12 months (337). Switzerland took over as the leading country for outbound U.S activity by volume ($3.15 billion), and the U.K. maintained its 12-month lead ($60.29 billion). Figure 3.
Healthcare took over as the most active target industry by deal volume in the U.S. in August 2016 ($25.55 billion), boosted by Pfizer, Inc.'s $13.53 billion offer for Medivation, Inc. (the largest U.S. public merger in August 2016). Computers & Electronics retained its position of most active target industry by number of deals for the month (211), and held onto its position of most active target industry for the last 12 months, as measured by both volume ($369.58 billion) and number of deals (2,621). Figure 2.
In August 2016, the average value of U.S public mergers ($2.13 billion) and the average value of the five largest U.S. public mergers ($5.51 billion) reached a 12-month low. Figure 4. Cash was the leading form of consideration in August 2016 (82.4% of U.S. public mergers were all-cash), well above its 12-month average of 61.5%. Figure 9. The incidence of tender offers as a percentage of U.S. public mergers is in line with its 12-month average (22.5%) and the incidence of hostile offers remained low (5.6% of U.S public mergers, as compared to its 12-month average of 16.2%). Figures 11 and 12.
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