M&A at a Glance (September 2015)

Although M&A volume is generally still up so far in 2015 as compared to 2014, growth slowed in August 2015, following several months of robust activity.  Global M&A volume, as measured by total dollar value, decreased from July 2015, to $370.25 billion (a 20.04% decrease).  U.S. volume decreased by 22.80% to $202.27 billion, and the average value of U.S. deals also dropped by 11.80% to $612.90 million, driven by the decline in the average value of U.S. strategic transactions.  Bucking the downwards trend in August (and a somewhat weaker performance relative to strategic deals since May 2015), the volume of global sponsor-related transactions increased by 27.54% to $97.31 billion and U.S. sponsor-related transactions increased by 32.28% to $46.59 billion.  There was also a sharp increase in the value of global and U.S. sponsor-related transactions (91.84% to $778.50 million and 86.21% to $862.70 million, respectively).  Figure 1.

Healthcare was the most active U.S. target industry by volume in August 2015 ($47.15 billion), followed by Metal & Steel ($38.28 billion) and Computers & Electronics ($28.60 billion).  Metal & Steel rose to the top-five most active U.S. target industries by volume for the first time since the inception of this publication in April 2012, in large part due to the $31.32 billion offer for Precision Castparts Corp. by Berkshire Hathaway Inc., which was the largest U.S. public merger in August 2015.  Healthcare continues to be the most active industry by volume ($535.73 billion) by a wide margin over the last 12 months, more than double the second most active industry, Computers & Electronics ($243.15 billion).  Figure 2. 

August 2015 saw a significant decline in both global and U.S. crossborder transactions.  Global crossborder transaction volume declined by 36.87% to $125.02 billion compared to the previous month, while U.S. inbound crossborder transaction volume declined by 44.97% to $47.49 billion over the same period.  In terms of crossborder transactions, the average value of U.S. outbound transactions was the only area that saw an increase in August relative to July (from $451.6 million to $820.4 million, an 81.67% increase).  Figure 1.  Apart from the United Kingdom, with $35.13 billion in deal volume, no country saw significant inbound U.S. crossborder activity in August 2015 (the second-place country was Japan with $4.30 billion in deal volume).  The United Kingdom's strong performance was due to the $30.63 billion offer for Baxalta, Inc. by Shire Plc.  Canada maintained its top position for the number of inbound U.S. crossborder transactions in August 2015 with 39 transactions.  Spain took the top position for outbound U.S. crossborder transactions by volume ($16.17 billion).  Figure 3. 

Average reverse break fees for U.S. public company mergers increased to 6.2% in August 2015, as compared to 5.6% over the last 12 months.  Figure 7.  The incidence of tender offers in August 2015 decreased to 11.8%, compared to 23% over the past 12 months.  Figure 11.  Finally, we note that no U.S. public mergers in August 2015 had a go-shop provision.  Figure 8.