M&A for U.S. Targets Sees Best First Quarter in Five Years


MnA Trends Q1 2017 (2)

The first quarter of 2017 was the strongest first quarter for M&A involving U.S. targets valued at at least $100 million in at least five years, according to Bloomberg Law data.  Acquirers announced or proposed 287 acquisitions totaling more than $581.6 billion this past quarter.

Compared to the first quarter of 2016, the first quarter of this year saw a modest 14.8 percent increase in deal count and a more significant 42.3 percent increase in deal volume.  In addition, acquirers sought larger targets to start off this year—the average deal size in Q1 was $2 billion versus $1.6 billion in Q1 2016.

Compared to the fourth quarter of 2016, however, Q1 2017 saw declines in both deal count (down 10.6 percent) and deal volume (down 10.7 percent).

Mega Deals Rebound

When examining deals greater than $10 billion dollars, or mega deals, the numbers show that these deals accounted for more than 50 percent of the total deal volume in the first quarter.  In fact, after a slow first three quarters of 2016, mega deal volume jumped 70.3 percent from the third to the fourth quarter of 2016.

Market Slice Q1 2017 MnA

Although mega deal volume declined 11.5 percent from the fourth quarter of 2016, the $304.3 billion announced or proposed in the first quarter was the second strongest quarter since 2015. With the number of mega deals announced or proposed per quarter leveling off over the past year, the high aggregate deal value during the past two quarters indicates that acquirers continue to seek high dollar value acquisitions.

Pharma Tops Industry Groups in Deals

Pharmaceutical deals led the way during the first quarter of 2017. Deals announced or proposed within that industry topped both the mega deal ($136.9 billion) and mid- and large markets ($30.6 billion). In early 2017, acquirers sought mega deals in intellectual property and technology driven industries.

Acquirers announced or proposed acquisitions valued at over $260 billion in the pharmaceutical, media and software industries during the first quarter.

Pharma Tops Q1 2017 MnA

Over the past several years, companies in the REIT and real estate industries were major targets for acquirers, combining for $511.4 billion in deals during the period from 2013-2017. However, recently acquirers seeking mid-to-large market targets have shifted their focus to the pharmaceutical and commercial services industries.

Over the period from 2013-2017, the top industry for mega deals was pharmaceuticals with an aggregate deal value of $779.4 billion and average deal size of $39 billion (20 deals). During the same period, the top industry for mid- and large market deals was real estate, with an aggregate deal value of $304.5 billion and average deal size of $462 million (659 deals).

For more on the latest trends in M&A, Bloomberg Law subscribers can access our Quarterly M&A Market Update.