After a fourth consecutive year of strong deal flow, the M&A cycle ebbed somewhat to start 2018, with 1Q recording year-over-year declines in both volume and value. However, underlying factors still remain fairly strong, our analysts argue, positing that the slow start to the year belies what 2018 will eventually notch. The report also includes spotlights on healthcare and divestitures, exploring why activity has been more resilient in the former and the forecast for the latter for the rest of the year.
- After a strong 2017, M&A activity got off to a sluggish start in the first quarter of this year. Across North America and Europe, 4,867 deals were completed in 1Q 2018, totaling $616.7 billion in value—18% and 25% year-over-year decreases, respectively.
- Though the pace of completed corporate divestitures was rather slow in 1Q 2018, 463 divestitures totaling $149.0 billion have been announced but have yet to close. We expect divestiture activity to increase during the remainder of the year, as companies look to slim down after the recent buying binge.
- B2C transactions accounted for just 15.9% of deal flow in 1Q 2018. Interest in traditional B2C assets has dwindled as tech-focused firms continue to make their mark on consumer-facing businesses. Further, businesses that were once thought of as traditional B2C, such as retail, are now created as tech-focused ecommerce firms.