Global engineering and construction M&A activity slowed in Q1 17 towards more seasonal norms, but well off the pace of Q1 16. Q1 16 activity benefited from five megadeals (including two larger than $4.0 billion) which was significantly higher than levels seen in Q1 15 or in the most recently completed Q1 17. In Q1 17 there were two megadeals both of which had announced values of just over $2.0 billion. Continuing a trend of 2016, quarter-on-quarter total deal value continues to decrease versus 2015 and in Q1 17 versus 2016 as well.
With the exception of civil engineering, the entire sector for both the value of M&A transactions and the overall number of deals declined compared to Q1 16 and versus Q4 16. While some of the slowdown versus Q4 16 is attributed to traditional seasonal influences, a level of uncertainty that has impacted M&A activity the last year continues to be a reality.
Further impacting M&A is the Asian markets which are heavily driven by China. On a Q1 trailing four-quarter basis, the value of transactions continues to decline ($21 million in most recent Q1 17 trailing four quarters vs. over $30 million for the Q1 16 trailing four-quarter period). Until currency controls are loosened, we expect outbound Chinese investment to be tempered heavily influencing overall M&A activity in Asia.
"Q1 17 M&A activity decreased to $12 billion which is the lowest level in the last three years. While there are some seasonal influences on the first calendar year quarter in any year, the drop in Q1 17 was far more pronounced than in previous years suggesting ongoing levels of heightened market uncertainty as well as tempered demand from Asia, and specifically Chinese investment."
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