Global industrial manufacturing deals insights: Q2 2017

Executive summary

The following is an analysis of global industrial manufacturing deals with disclosed values greater than $50 million.

As anticipated in our Q1 deals insights report, Q2 industrial manufacturing deal activity remains relatively subdued. The $15.9 billion of deal value was the lowest since Q2 2016 ($12.1 billion) and the second lowest quarter in more than three years. The lack of deals greater than $5 billion in value is the main driver of lower than historical average aggregate deal value.

In spite of the fact that cross sector global and US M&A value and volume increased in Q2 2017 compared with Q1 2017, industrial manufacturing experienced declines in both deal value and volume over the same period. This may reflect the sector’s conservative sentiment given the continued geopolitical uncertainty.

Although industrial manufacturing deal volume was down quarter on quarter, the 53 deals announced in Q2 2017 is consistent with the trailing six quarters’ average. Further, even though average deal size is on a downward trend, the volume of industrial manufacturing deals in the first half of 2017 is an indication of market participants’ desire to use M&A to achieve their strategic objectives.

Industrial manufacturing dealmakers continue to face headwinds resulting from the continued uncertainty primarily driven from the US Administration’s inability to shine a clear light on the future of trade, regulatory and tax reform. The risk this creates in the deals market appears to be keeping certain dealmakers in the sector on the sidelines or looking at smaller sized investment opportunities.

Key trends/highlights

  • Deal value for the first half of 2017 vs. first half of 2016 was $38.2 billion and $45.2 billion respectively, a 15% period-over-period decline while deal volume was 114 deals vs. 94 deals, a 21% increase.
  • Deal value for Q2 2017 was $15.9 billion compared with $22.4 billion in Q1 2017. Deal volume decreased from 61 deals in Q1 2017 to 53 deals, a 13% decrease.
  • There were four megadeals (deals greater than $1 billion) in Q2 2017 with aggregate transaction value of $5.5 billion. Two of the four occurred within Chinese borders.
  • The largest deal in Q2 2017 was the $1.7 billion acquisition of Chinese based Changsha Zoomlion Environmental Industry Co Ltd by a Chinese investor group.
  • The Asia & Oceania region remains as the top contributor to M&A activity and accounted for 56% of deal value and 53% of volume in Q2 2017 respectively.
  • The top 10 deals in 1H 2017 accounted for $16.7 billion of aggregate deal value compared with $32.9 billion in the 1H 2016.
  • There were 11 mega deals in 1H 2017 with aggregate deal value of $17.8 billion compared with only five in 1H 2016 with aggregate deal value of $28.9 billion.

"Without a meaningful catalyst such as tax reform, M&A activity in the industrial manufacturing sector will likely continue to be constrained in the second half of 2017."

Paul Elie, US Industrial Manufacturing Deals Leader

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Paul Elie
Industrial Products Deals Leader
Tel: +1 (313) 394 3517
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Bobby Bono
US Industrial Manufacturing Leader
Tel: +1 (704) 350 7993
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