Merger and Acquisition (M&A) activity in the industry segment I cover seems to have been hot for some time. I, along with others dependent upon the strength of the industry like say magazine media companies, view market consolidation as having the potential for decreasing revenues. Fewer companies makes for a less vibrant marketplace. Just take a look at the size of the magazines covering controls and automation these days.
Although this report covers a much broader segment than controls and automation, I always study the quarterly PwC M&A report carefully. And here is Q3 2018.
Global industrial manufacturing M&A results for Q3 2018 experienced a significant pull back in deal value from the Q2 2018 historic high with aggregate disclosed value of $11.7 billion, which is a 73% decrease quarter on quarter and a 52% decrease compared to the three-year quarterly average. The most recent quarter is directionally consistent with the 42% decrease seen in global cross-sector M&A deal value from Q2 2018. Since PwC’s last publication, the US administration has taken steps to implement tariffs on imported goods and a trade war has ensued. The uncertainty around how this will affect the M&A landscape more heavily weighed on industrial manufacturing than other sectors this quarter.
Looking at deal volume, there were 477 deals announced in Q3 2018 compared to 612 deals announced in Q2 2018, a 22% decline. The three-year average number of announced deals was 624 to which the 3Q 2018 results represent a 23% decline.
Worldwide cross-sector and industrial manufacturing deal making had been humming along with five and four consecutive quarters of deal value growth, respectively, prior to Q3 2018. The question remains if this contractionary quarter is the beginning of a trend or just a pause in action resulting from uncertainty in the economic, regulatory, and political environments.
- Total aggregate disclosed deal value sank 73% to $11.7 billion in Q3 2018, a 52% drop compared to the three-year quarterly average of $24.2 billion and a 73% decrease from Q2 2018 of $42.9 billion.
- Total deal volume decreased to 477 deals in Q3 2018, a 23% drop compared to the three-year quarterly average of 624 deals and a 22% decrease from the 612 announced deals in Q2 2018.
- There was $78.9 billion of deal value announced for the first nine months of 2018 compared to $60.4 billion for the same period of 2017, a 31% increase.
- There were 1,738 deals announced for the first nine months of 2018 compared to 1,906 deals for the same period 2017, a 9% decrease.
- A $1.2 billion merger was the largest deal announced in the quarter.