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M&A Roundup: Deal Volume Contracts as Activity in AWM Sector Plummets in 1H/17

August 04, 2017, 07:27 AM
Filed Under: Mergers & Acquisitions

Two new reports show that corporate consolidation has continued to slow during 2017, a trend that analysts at Pitchbook blame on a climate of political and economic uncertainty.  
According to Pitchbook's latest M&A Report, the pace of buyout activity slowed in the first half of 2017. In North America and Europe, an estimated $910.6 billion in deal value was completed across nearly 9,000 transactions in the first half of 2017 -- representing more than 20% year-over-year decreases in both value and volume.

Meanwhile, private equity continues to eat up a larger part of total M&A activity, with sponsor-backed acquisitions growing steadily from 24.7% of all transactions in 1Q 2016 to 29.8% in 2Q 2017.

The latest data from PwC finds that deal activity in the asset and wealth management industry all but came to a halt in the month of June. After the deal frenzy seen during the first quarter, deal activity in the second quarter dropped 32% in that sector, according to one PwC analysis.

"While the overall asset management industry has been growing as a whole, active managers are continuing to struggle with declining assets as a result of continued rise of passive investing," the analysts write. "Their pain is being exasperated by fee pressures as well as rising costs relating to increasing technology and regulatory spend. While M&A is one of the key tools to navigate and survive in  this environment, finding the right partner and agreeing to deal terms has been difficult for both buyers and sellers.

Other sectors experienced mixed results.

While the number of deals in pharmaceuticals and life sciences and health services was down from Q2 2016, transaction value in both sectors was the highest in more than a year.

Oil and gas also saw vigorous activity in the first half of 2017 despite a decline in oil prices during the period. While volume was modest, megadeals boosted deal value significantly year-over-year in Q2, with many acquirers’ capitalizing on their access to cash, according to PwC.

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