Global Acquirer Trends Report, H2 2016

Global Acquirer Trends is a bi-annual report focusing on M&A activity across Livingstone’s key markets.

While 2016 was a year of significant political change, particularly given the US election result and the Brexit vote, it was a strong year for M&A activity across Livingstone’s key markets of
the USA, UK and Europe, and Asia. The rapid increase in acquisitions by Chinese groups into all of these territories attracted headlines and political attention, and increasing popular and political resistance, as German and American regulators withdrew approval for high-profile acquisitions and the British government subjected ‘strategic’ investments by Chinese groups to greater scrutiny.

Despite the rapid reported growth in the volume of Chinese acquisitions – up over 30% into the USA, 215% into the UK, and nearly 250% into Germany – their proportion of inbound acquisitions remains small, as Chinese acquirers accounted for one in ten in the USA, one in 15 in Germany and one in 20 in the UK.

In contrast, M&A activity in China itself declined, with volumes of both domestic and inbound acquisitions falling compared to 2015 levels after a surge in domestic deals that year. The Industrial sector is still the most important for inbound M&A volumes, accounting for 40% and growing by 25% year on year, compared to a 40% decline in Media & Technology (now
around one inbound deal in ten).

In Germany, inbound acquisitions exceeded domestic deals for the first time, as domestic volumes declined slightly but acquisitions by foreign groups leapt 35%. Deals in the Industrial sector accounted for only a third of inbound acquisitions, giving the lie to lazy assumptions about the composition of the Mittelstand.

In the UK, the plunge in Sterling following the Brexit vote saw many international groups benefit from cheaper acquisitions, with a surge in Q4 dealmaking as uncertainly receded (at least temporarily). The Media & Technology sector grew fastest here, by 25% year on year, but accounts for less than a quarter of inbound acquisitions, compared the Business Services sector at nearly 40% – reflecting the UK’s strong service-led economy.

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