EDGEMONT CAPITAL BLOG
Global M&A Hits Record High, Healthcare M&A Leads the Way
According to new research published by the firm Mergermarket, global mergers and acquisitions reached a 17-year high in 2018’s first quarter. The report found 3,774 global transactions occurred during the first quarter. The total value of these transactions was more than $890 billion. This marks the strongest M&A start to the year since Mergermarket began recording data in 2001. It’s an 18% increase from 2017’s first quarter.
At the end of the first quarter, 14 transactions had reached the $10 billion mark, suggesting not just a flurry of M&A activity, but also surging values and multiples.
The report states that tech companies hoping to diversify their offerings are major players in this new global market, with traditional firms merging with new and innovative firms as a defensive measure. Trade fights between the US and China continue to spur global M&A activity. The report also notes that global private equity activity is high, with investors seeking larger targets amid a saturated middle market.
The first quarter included 699 buyouts, making it the strongest first quarter since 2007. It’s also the fourth quarter in a row in which buyouts have reached $10 billion.
The report repeatedly emphasizes the role of healthcare M&A in the recent flood of activity. Amazon’s foray into pharmaceuticals appears to have urged deal-making in related healthcare and pharmaceutical sectors. CVS/Aetna announced their deal in December and the Express Scripts/Cigna deal was finalized in the first quarter. Amazon’s partnership with Warren Buffett and J.P. Morgan aims to reduce healthcare costs and increase quality of care. It’s also spurred fears that Amazon may enter the market and compete with traditional healthcare companies. This has spurred a healthcare consolidation in an attempt to edge out future competition from Amazon.
In early March, Cigna bought Express Scripts for $54 billion in stock and cash and the acquisition of Aetna was also approved. These deals are increasingly common in the US, which makes up 44.2% of the global volume of M&A activity. This year alone, $393.9 billion has been invested in American businesses. This is a 26.1% increase above the figure from the same periods last year.
It’s not just American businesses working to consolidate their own market, though. China boasted significant consolidation activity, too, with firms spending $68.7 billion. This marks the highest M&A investment quarter on record.
It’s unclear how the healthcare market will look as the landscape shifts, but one thing is certain: now is the time to consider a transaction..
About Edgemont Capital Partners
Edgemont Capital Partners is a specialist healthcare investment banking firm providing the highest level of mergers and acquisitions advisory services founder-owned and entrepreneur-run healthcare and life sciences companies in the lower middle and middle markets. Our world class transaction expertise is a result of our extensive and proven track record of success. We have advised on over 125 transactions representing more than $35 billion in combined value.