M&A activity continued to decline by most metrics throughout January 2016, both in the U.S. and globally. While the total number of deals in the U.S. market increased by roughly 12% to a total of 812, total U.S. volume declined by over 50% to only $77.62 billion, the lowest total since January 2015. Average deal size fell by a similar proportion to only $264.9 million. The bulk of this decline in U.S. market activity can be attributed to a 60.67% drop in strategic activity, from $154.6 billion in December 2015 to $60.81 billion in January of the new year, with sponsor-related activity falling by a modest 1.57% (to $16.81 billion). The global market for M&A did not fare much better, as the number of transactions fell slightly in January 2016 (less than 1% to 2,980), and total volume dropped 54.79% to $186.26 billion, the lowest global total since January 2013. Average deal size fell roughly 48% (to $124.4 million). Strategic deal volume dropped 58.11% in the global market (to $152.59 billion), while sponsor-related activity declined 29.44% (to $33.68 billion). Figure 1.
Following the trend from December 2015, both U.S.-inbound and U.S.-sourced outbound deal volume declined in January 2016. Figure 1. China provided the greatest volume of U.S.-inbound transactions in the month ($14.13 billion) for the first time since this publication began reporting that metric in March 2013, although Canada continued to hold its lead in U.S.-inbound crossborder transactions over the previous 12-month period, with a total of $125.99 billion invested into the U.S. since February 2015. The U.K. held on to its position as the largest recipient of U.S.-sourced outbound transactions by volume in the previous 12 months, with $70.24 billion. Figure 3.
Machinery claimed the top spot in the U.S. active target industries list for the first time since the onset of this publication in April 2012 with $21.51 billion in volume in January 2016, driven by the acquisition of Johnson Controls, Inc. by Tyco International Plc. Healthcare retained its position atop the industries list by total volume over the previous 12 months despite a slow January, with over $567 billion in transaction volume since February 2015, while Computers & Electronics maintained its lead atop the industries list for number of deals both in the month of January (245) and over the previous 12 month period (2,865). Figure 2.
Notwithstanding that Dealogic tracked $16.81 billion in sponsor-related transactions in January 2016, according to MergerMetrics, no U.S. public merger valued at $100 million and above for which a definitive agreement had been signed involved a financial buyer. Figure 7. In addition, there were no go-shop provisions entered into in all of January 2016. Figure 8. No tender offers occurred in January 2016, a decline that began in December 2015 and which represents a significant departure from the twelve month average of 21.4%. Figure 11. Hostile offers nearly tripled from December, on the other hand, jumping from 14.3% to 41.7% of all U.S. public merger offers. Figure 12. In another sizable departure from the twelve month norm, cash and stock deals made up 62.5% of U.S. public mergers during the month, representing an increase from only 15.4% in December 2015 and eclipsing cash-only deals for the first time since November 2014.
Click here to watch the Video Summary: M&A at a Glance (February 2016)
Click here to view the PDF.