H1 2013 Global M&A & Private Equity Summary

Key points

  • Total deal value stands at USD 896.1bn.
  • PE investors showing preference to sub USD 100m deals.
  • 8% value increase in US-based deals with regards to the same period 2012.
  • B2B, B2C & IT industries most attractive industries for investors.

Globally, considering several influential factors held back US & European deals in particular, it could be suggested that the industry performed strongly despite these restraints.

In the US, the first half of 2013 was always going to dip fairly significantly compared to the end of 2012. This is primarily due to the withdrawal of the Bush Tax cuts which saw Capital Gains increase significantly following the December 31st cut off date. With this increase in mind, many deals were forced through before the cut off playing a significant role in the reduced deal volumes in early 2013.

Across mainland Europe economic uncertainty is continuing to impact the M&A market. The UK however is showing strong signs of recovery and represents the most suitable entry point into the European market for US & Asian corporates. In their UK M&A Index, Deloitte predict that the US promises to drag the UK into M&A recovery, driving significant increases on deal volumes throughout 2013.

With the US being the main driving force behind UK M&A growth, strengthened company performances throughout the UK and growing economic confidence are positively impacting the UK’s attractiveness to external acquirers. Huge corporate cash piles, increased access to capital and with private equity acquirers highly motivated to invest large unspent sums, the UK M&A industry promises to grow considerably over 2013 and 2014.

Within the private equity industry the lower mid-market continues to maintain its attractiveness as transactions below USD 100m accounted for just under 70% in terms of deal volumes in H1 2013.

The draw of the lower mid-market can be put down to several factors, one of which being the appeal of bolt-on acquisitions. Large numbers of private equity acquirers actively seek bolt-on opportunities with existing synergies which represent a strong fit for their platform companies. Additionally, the difficulties associated with larger deals is also forcing investors to shift their focus. With pressure to invest increasing due to years of inactivity, lower middle market deals represent a more straightforward alternative.

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