BDO publication Horizons reveals that global mid-market M&A activity in Q2 2018 dropped 6.6 per cent; in other words, a total of 1,782 deals were registered, representing a total deal value of USD157.8 billion – or a 4.5 per cent drop – compared to Q1 of this year.
When the statistics from Q2 2018 are contrasted with those of Q2 2017, the decrease is even more significant, showing 353 less transactions (-16.5 per cent) and a USD22 billion decrease in value (-12.3 per cent). Only when looking back a full five years do we find lower figures: specifically to Q3 2013, which saw 1,658 transactions completed with a value of USD34.5 billion.
The current cautious behaviour of dealmakers can be explained by concerns about trade wars between the US, the EU and China, which are further adding to existing nervousness about the European immigration crisis and populism, as well as totalitarian tendencies across Europe, notably in Turkey and Poland. The upcoming elections in South America, the Brexit referendum and China’s tightening capital controls are boosting this anxiety too.
According to the report: the relative drop in deal value overall was lower than that of deal volume, pointing towards an ongoing trend for bigger transactions, while despite Brexit troubles, the UK & Ireland registered a deal volume rise of 16 per cent.
The industries with the weakest growth are consumer business (-12.7 per cent) and TMT (technology, media and telecommunications) at -12.5 per cent.
In terms of deals numbers, apart from the Nordic (+2 per cent), UK & Ireland (+16 per cent), Other Asia (+22 per cent) and Greater China (+10 per cent), all other regions recorded worse numbers in Q2 2018 than in the previous quarter. This was especially the case in North America, which recorded a decline of 129 transactions to 432 transactions (-23 per cent) in comparison to Q1 2018 and a decline of 189 transactions (-30 per cent) when compared to the same period a year ago (Q2 2017).
Global private equity activity remained high in Q1 2018, despite the general downtrend, although only 208 transactions (were registered, with a value of USD24.4 billion): 67 / -24.4 per cent transactions less than in Q1, 126 transactions less (-37.7 per cent) than in the same period in 2017.
Energy, Mining & Utilities fell by 23.4 per cent from 285 transactions in Q2 2017 to 187 transactions in Q2 2018.
