Despite economic and political instability throughout the year, global M&A value surpassed $4 trillion in announced deals in 2018, a 12% increase from 2017. M&A value in 2019 fell short of 2015’s record high of $4.3 trillion. The number of deals worldwide declined by 4% when compared to 2017 to 47,585 announced deals.
Buyers and the markets largely appeared unhampered by geopolitical risk and CEOs remained confident.
In the US, M&A activity jumped to $1.7 trillion, a 32% increase from 2017. The number of deals decreased by 8% to 12,442. US M&A activity accounted for 43% of worldwide activity by value and 26% by volume.
Mega deal value jumped 51% in 2018 compared to 2017 values. $1.5 billion worth of mega deals (deals over $5 billion) made up 38% of deal value in 2018.
M&A activity may already be slowing down with just $298.4 billion in announced deals in 4Q 2018 compared to $330.3 billion in 3Q and $503.2 billion in 2Q. A chance of a recession looming on the horizon may be dampening activity. Economists estimate a 15% chance of a recession in 2019 and a 30% chance in 2020.
While M&A activity may not reach 2018 levels, analysts expect dealmaking to remain strong. Companies still have lots of excess cash on balance sheets and need to put it to work. With the new US tax policy and general confidence in the economy, many will turn to acquisitions. According to a Deloitte survey, 79% of companies expect to execute more deals in 2019 than in 2018.
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