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ANALYSIS: Trends in M&A - A Look at the Second Quarter Numbers

July 19, 2017, 1:45 PM

Deal size is down 19.3 percent from the first quarter this year, but the pace involving U.S. targets remains brisk, according to Bloomberg Law data. Acquirers proposed or announced 326 acquisitions totaling more than $579.5 billion this past quarter.

The 326 deals proposed or announced in the second quarter were the most since the second quarter of last year, when 334 were proposed or announced. However, deal volume has trended downward for the second consecutive quarter, including an 8.4 percent reduction from the first quarter. This is the first time deal volume has trended down in consecutive quarters since at least 2013.

Overall, the M&A market has remained relatively strong over the past six quarters, following a sharp decline in both deal volume and deal count from the last quarter of 2015 to the first quarter of 2016.

Is the Mega Deal Frenzy Over?

For the first time since the second quarter of 2014, large market deal volume, at $252.9 billion, outpaced the mega market, at $243.3 billion. Large market deals are those defined as greater than $1 billion to $10 billion, while mega deals are those greater than $10 billion.

Large market deal volume jumped 32.9 percent from $190.4 billion in first quarter. While the mega market has been inconsistent over the last several quarters, the volume of large market deals has trended upward.

With over $700 billion in acquisitions exceeding $10 billion proposed or announced during the last quarter of 2016 and the first quarter of this year, the mega deal market appeared to be on the rebound after a slow start to 2016. However, mega deal volume declined 34.6 percent from the first quarter this year – the first quarter-over-quarter decline in nearly a year – raising questions as to whether the mega deal frenzy is coming to a close.

Acquirers proposed or announced 17 deals exceeding $10 billion this year, including nine in the second quarter. That puts 2017 on track to equal (or slightly) exceed the 32 mega deals announced in 2016, but is well off the pace of 54 in 2015. Since the beginning of 2013, acquirers have announced mega deals for 137 U.S. targets, but only 35.7 percent of those have been proposed or announced since the beginning of last year.

In addition, more than 34.9 percent of the mega deals proposed or announced between the beginning of 2013 and mid-2016 were terminated or withdrawn. By contrast, large deals during the same period failed at only a 14.8 percent rate.