Although mergers and acquisition numbers were predicted to rise in 2018, business slowed down by the fourth quarter, according to a year-end report from PwC that covers the industrial manufacturing sector. Total deal value in 2018 was $97.4 billion, an increase of 11 percent over 2017’s total driven by a smaller number of businesses trading in larger amounts of money. Released in January, the report notes that Q2 2018 ended strong with a deal value of $42 billion. A relatively lean $35 billion overall deal value was contributed in the second half of the year, due to political uncertainty, volatile stock markets, and downward GDP growth concerns in the United States and China.
Total deal volume in 2018 decreased to 2,330 mergers and acquisition deals, a drop of 10 percent over 2017. Q4 shows the drop even more dramatically; at 464 deals, it was the lowest amount of deal activity in any quarter since 2014.
The largest deal in 2018, an acquisition, contributed $11.1 billion by itself in the fourth quarter. In total, 16 of the year’s industrial manufacturing deals and acquisitions were large (greater than $1 billion). These had an aggregate value of $43.1 billion. Although there were 21 large deals in 2017, their aggregate value was 8 percent less, at $40 billion.
Of the companies that were doing business in Q4 2018, most were in the electronic and electrical equipment sector (55 percent). This is the first time the category has been first in three years.
PwC analysts say that despite the decline in Q4 2018, mergers and acquisitions are still “solid” in industrial manufacturing, and that business leaders should seek more quality assets instead of slowing down deals in reaction to the “slowing global economic outlook.”
