According to the latest year-to-date data from S&P Capital IQ, merger and acquisition activity in the U.S. has decelerated with the number of deals lower than the same period last year as well as total transaction value.
To date, there have been just over 6,400 total transactions in the 11 sectors covered by the S&P, which reflects a 4.3 percent decline in deal volume from the same period last year. Transaction values are off double digits, the firm said in its report.
Richard Peterson, principal analyst at the firm, said that “with announced U.S. M&A dollar proceeds in 2017 off 16 percent from year-ago activity, the slump in several sectors’ deal [counts] represents another cautionary sign for deal making this year.”
The analyst noted that real estate remains the top sector, followed by consumer discretionary — which includes retail and fashion apparel deals. Peterson said real estate M&A activity garnered 32 percent of the total number of deals so far this year. “While that percentage approximates real estate deals share of announced M&A shares at this time last year, the sector has experienced the second-biggest single drop in deal count year-over-year with a decline of 99 transactions,” Peterson added.
The firm also said that the second “most frequently targeted sector for U.S. M&A deals to date” is the consumer discretionary market. “However, this sector has suffered the biggest year-over-year drop in number of deals as deal count is 114 lower than a year ago,” Peterson said. “Contributing to this result has been a drop in the number of retail industry deals as to date this year there have been 159 announced M&A transactions. That represents the lowest deal count at this point in time for the retail industry since 2009 when 121 M&A transactions were announced.”
In the consumer staples market, the S&P said dealmaking was robust. The energy sector is also faring well with the number of deals outpacing last year. “As for areas seeing a notable slowdown in M&A deals, the information technology has reported 854 announced U.S. M&A deals to date this year, the slowest pace of deals since 2013,” Peterson said. “Similarly, this year’s financial sector M&A deal count of 422 is the most sluggish since the 2013 period when 406 transactions took place.”
The analyst also said the pace of dealmaking in the industrial sector is also down.
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