U.S. M&A activity down 22.5% in 2016

Still second-highest total deal value on record

Deal handshake

There were 4,951 mergers and acquisitions deals completed in the U.S. in 2016, with a total value of $1.5 trillion in 2016, according to a new report by M&A intelligence service Mergermarket.

That’s down 22.5 percent from 2015, when 5,298 deals were completed totaling $1.9 trillion. But 2016 was the second-highest annual U.S. value since Mergermarket started tracking the figures in 2001.

The report showed 2016’s U.S. deal activity was due in large part to interest from foreign buyers, who spent $450.5 billion acquiring 952 U.S. companies last year, up 1.5 percent from 2015 and a record high on Mergermarket.

The 1,201 U.S. outbound deals totaled $264.9 billion in 2016, up 12.1 percent from 2015.

Energy, mining and utilities deals made up the largest portion of 2016 U.S. M&A deals, totaling $337.4 billion in 2016, up from $205.4 billion in 2015. Industrials and chemicals totaled $206.6 billion, down from $238.2 billion in 2015. Pharma, medical and biotech deals totaled $176.7 billion, down from $298.4 billion in 2015. Technology deals totaled $176.7 billion in 2016, down from $229.9 billion. Media contributed $133.2 billion, up from $41.5 billion the previous year. Business services were $115.2 billion in 2016, down from $157.3 billion in 2015. Consumer deals totaled $86.3 billion in 2016, down from $181.8 billion in the prior year. And “other” deals came to $231.9 billion, down from $545 billion in 2015.

The report also points out the uncertainty surrounding M&A as President-elect Donald Trump prepares to take office this month.

“Despite strong M&A activity in the last few years, prospects for U.S. dealmaking in 2017 remain cloudy following Trump’s threats on the campaign trail of protectionism and trade agreement revisions,” the report says. “At the same time, the inevitable evolution of certain industries caused by disruptive new technologies may still lead many firms to consolidate or seek innovative add-ons to ensure future competitiveness. Thus, the unpredictability of 2016 may well continue into 2017, with a Trump presidency rendering the New Year a wild card.”

In southeastern Wisconsin, deal activity was robust last year. Some of 2016’s largest M&A deals were the Johnson Controls-Tyco merger and Komatsu’s acquisition of Joy Global Inc. See a list of the year’s biggest Milwaukee-area M&A deals in BizTimes Media’s synopsis of the biggest Milwaukee-area business stories of 2016.

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Molly Dill, former BizTimes Milwaukee managing editor.

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