Aggregate deal value and deal volume down
Overall Canadian deal volume fell by about 5% in the first six months of 2019 when comparing activity to the latter half of 2018.
As a percentage of total transactions, domestic deals declined from 41% to 38% when comparing the first half of 2019 to the preceding six months. Inbound deals rose from 22% to 23%, while the number of outbound transactions was stable at 36%. Corporate deals accounted for 71% of transactions in the first half of 2019, compared to 29% for private equity. This split was virtually unchanged from the previous six-month period (73% versus 27%).
Average deal value up slightly
Overall deal value of US$73 billion showed an 11% decline from US$82 billion in the second half of 2018. Average deal value in Canada fell slightly, from US$192 million to US$184 million.
The largest transaction in the first half of 2019 was Newmont Mining Corp.’s US$10-billion deal to buy Vancouver-based Goldcorp Inc.
Private equity firms and pension plans were responsible for six of the 14 mega deals (deals greater than US$1 billion). Notable private equity transactions included Brookfield Asset Management Inc.’s leveraged buyout of Oaktree Capital Group and Onex Corp.’s acquisition of WestJet.
Corporate transactions, including the Newmont-Goldcorp deal, accounted for another eight mega deals in the first half of 2019.
Retail deal volumes up amid decline for technology sector
Technology deal volume fell by 4% compared to the second half of 2018.
One segment with a notable drop was financial technology, in which deal volume was down by 20% over the second half of 2018. After several quarters of feverish activity, we suspect the drop may simply be a pause as companies focus on absorbing and integrating their fintech acquisitions.
The retail segment saw a noteworthy increase in activity, with deal volumes rising to 53 transactions in the first six months of 2019 from 33 in the second half of 2018. The retail activity could be a sign of buyers snapping up troubled or distressed assets, or it may simply be the result of buyers with strong risk appetites placing educated bets.