As a result of the market volatility caused by the global pandemic, merger and acquisition (M&A) activity got off to a rough start in 2020. According to research data analyzed and published by Stock Apps, there were 24,698 deals announced globally during the first half of 2020. Comparatively, H1 2019 saw a total of 29,096 deals, marking a 15.1% decline YoY.
Moreover, the total value of these deals declined by a larger margin, tumbling from $1.85 trillion to $1.02 trillion, a 44.7% drop.
On the basis of deal value, Goldman Sachs took the lead globally during the 6-month period. The firm served as a financial adviser in 113 deals worth a total of $205.9 billion. It was the only firm that managed to cross the $200 billion mark.
Goldman Sachs outpaced other financial advisers by a considerable margin seeing as JP Morgan Chase was second with $178.9 billion. The reason for this wide margin was the fact that it advised several huge-ticket deals. It served as an adviser on 41 billion-dollar deals, among which were 5 megadeals, surpassing $10 billion each.
Together, the top 3 firms accounted for about half the total deal value of the top 20 advisers. Their cumulative deal value was $555.6 billion.
Goldman Sachs Deal Value Declines by 69.98% YoY in H1 2020
However, in comparison to H1 2019, there was a significant decline in both the number and value of deals. In H1 2019, Goldman Sachs advised on 133 deals worth a total of $685.9 billion. In terms of deal value, there was a decline of 69.98%.
Similar trends are seen for almost all firms in the top 20, with only 5 recording positive growth year-over-year (YoY). These included Societe Generale, whose deal values soared by 3,722.91% YoY. On the other hand, Evercore recorded the largest decline, which was at 91.15% YoY.
On the basis of deal volume, Ernst & Young took the lead while Goldman Sachs was in second place. Ernst & Young was a financial adviser on a total of 137 deals, worth $30.6 billion and was one of the four firms reporting positive YoY growth.
Notably though, it ranked 17th in terms of deal value as it was primarily involved in low-value deals. Among the deals it advised on, only 5 were worth a billion dollars or more and none were megadeals.
Deloitte had the largest decline, sinking by 54.81% after advising on 47 deals worth $20.3 billion.
According to PwC, some noteworthy trends emerged during the period. For instance, in Q2 2020, there were only three megadeals, compared to 18 in Q2 2019. Among the 18 deals were three of the largest deals on record, each worth $60 billion or higher. In contrast, the largest deal in Q2 2020 was worth $10.1 billion.
Q3 2020 Off to Record Start with $256B Deal Value, Tech in Lead
After a significantly rocky start, the second half of 2020 started out on a high note. According to data from Refinitive, the third quarter of 2020 saw at least 21 deals valued at $5 billion or more. These were worth a cumulative $256 billion.
Among the noteworthy deals in July, was the almost $10 billion acquisition of Dominion Energy by Berkshire Hathaway. Analog Devices, the semiconductor maker, also announced plans to purchase Maxim Integrated Products for over $20 billion.
In August 2020 alone, there were nine such deals, the second highest number on record after August 1999. Leading the upsurge was the tech sector, accounting for 27% of M&A activity worldwide in August 2020. Of the top 10 deals that took place during the month, six had tech targets.
Interestingly, the tech industry was also the top sector during Q2 2020, with 27% of all transactions according to PwC. Among almost 1,600 deals, tech accounted for 339 deals. This percentage marked an increase from Q2 2019’s 24%.
According to CBI Insights, Apple was the most active acquirer among the FAMGA giants in 2020 (Facebook, Amazon, Microsoft, Google and Apple). At the end of July 2020, seven deals by Apple had been announced, though none had an official value attached.
However, despite the strong deal activity reported in July and August, global deal activity in 2020 was still down by 31% YoY for the first eight months of the year.
Regionally speaking, the US is leading the global nosedive with total deal value sinking by 50% during the same period. Deal activity in the US is, in fact, at its lowest level in seven years. In comparison, deal activity in APAC increased by 9% YoY during the same period, while in Europe, it has increased by 2%.