According to MergerMarket's Monthly M&A Insider Report, global M&A activity declined in Q1 2016 after strong levels of activity in 2015. The first few months of 2016 resulted in a total of 3,474 deals worth an aggregate of US$605.5 billion, down from the 4,126 deals worth US$785.5 billion in Q1 2015. The top performing sector, industrial and chemicals, was responsible for 655 deals worth US$145.1 billion, representing a 71.3% increase in value from deals in this sector in Q1 2015.
The decrease in M&A activity has been particularly noticeable in North America where Q1 2016 resulted in 1,117 deals worth $US257.2 billion compared to 1,396 deals valued at US$370.8 billion in Q1 2015. The pharma, medical & biotech sector led the way in North America with 125 deals worth US$56.2 billion. The report attributed the decline in deal value and activity to wavering confidence in the European and Asian economies, global political concerns and uncertainty with respect to U.S. tax laws and policies.
The political turmoil and faltering economy in Brazil have helped depress M&A activity in this country. Brazil customarily represents a large portion of M&A deals in Central and South America. In Q1 2016, however, Brazil represented 25.9% of deal value and 48% of volume in the region, resulting in a decrease of 27.9% and 11% in value and volume, respectively, from Q1 2015. Overall, Central and South America accounted for 100 deals worth US $10.1 billion during Q1 2016, down from 128 deals valued at US $11.3 billion in Q1 2015. Energy, mining and utilities was the top performing sector in this region in Q1 2016.
The worldwide decline in oil prices and the uncertainties surrounding the South African economy has had an impact on the number of M&A deals in the Middle East and Africa. Q1 2016 saw 48 fewer deals in this region, as compared to Q1 2015.
Although M&A activity in the Asia-Pacific region (excluding Japan) declined in Q1 2016, China announced 339 deals valued at US$82.5 billion, representing a 16.8% increase in value from its activities in Q1 2015, and was responsible for 62.6% of the value of M&A activity in this region. The report notes that of particular importance is the increased level of interest by Chinese bidders on foreign targets. Outbound activity from China represented 26.3% of cross-border deals globally in Q1 2016.
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