BDO Horizons 2018 - Issue 3
02 August 2018
The highly-regarded BDO publication Horizons reveals that global mid-market M&A activity in Q2 2018 dropped 6.6%; in other words, a total of 1,782 deals were registered, representing a total deal value of US$ 157.8bn - or a 4.5% drop - compared to Q1 of this year.
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.
Key findings from the report include:
- The relative drop in deal value overall was lower than that of deal volume, pointing towards an ongoing trend for bigger transactions
- Despite Brexit troubles, the UK & Ireland registered a deal volume rise of 16%
- The industries with the weakest growth are consumer business (-12.7%) and TMT (technology, media and telecommunications) at -12.5%
- If we have a look at the number of deals, apart from the Nordic (+2%), UK & Ireland (+16%), Other Asia (+22%) and Greater China (+10%), 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%) in comparison to Q1 2018 and a decline of 189 transactions (-30%) 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 US$ 24.4bn): 67 / -24.4% transactions less than in Q1, 126 transactions less (-37.7%) than in the same period in 2017
- Energy, Mining & Utilities fell by 23.4% from 285 transactions in Q2 2017 to 187 transactions in Q2 2018