M&A deals witnesses a drop of 70%

Team Industry Outlook | Tuesday, 20 August 2019

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This year has seen a huge drop down in the state and condition of the M&A. Tax and advisory firm Grant Thornton ‘s data record shows that in the last six months, M&A deals have crashed 70% to $22.1 billion which was $ 73.6 billion last year from January to July.

It is only in the month of March that deal values showed some slight elevation, in almost every other month, there’s been a slump. Grant Thornton’s monthly M&A Dealtracker in July continued to show a subdued deal sentiment. Deal value nosedived by more than half to $4.3 billion, from $9.1 billion in the same month last year. However, it was an improvement over the $1.3 billion in June.

July witnessed 39 deals worth $4.3 billion, comprising one deal in the billion-dollar club and five deals valued over $100 million each, together totalling to

$4.1 billion, forming 95% of the total deal value.
The attitude remains apathetic because of macro and domestic headwinds, particularly the US-China trade war. Global technology supply chains have been threatened by the prospect of US sanctions. Brexit-related uncertainty continues. And rising geopolitical tensions have roiled energy prices.

Manufacturing, energy, startups, pharma, infra, IT, banking and e-commerce sectors led the deal values in 2019, capturing 91% of the total. These were driven by market consolidation, and to capitalise on marketshare. IT, startup and pharma sectors continued to drive deal volumes, capturing 48% of the total, and together executing 126 deals so far this year.

“Though the Union budget has laid down a road map for growing the economy in a sustained manner with a focus on both urban and rural sectors, the impact on deal activity will depend on the measures and policies taken by the government to counter the slowdown, implement/ promote growth-focused investment plans and impact of global economic trends,” states Grant Thornton India director Pankaj Chopda.

The startup sector has been leading the pack for M&A both in terms of deal values and volumes, but for the record witnessed the highest monthly values till date, driven by Oyo Rooms’ $2-billion stake acquisition. Retail, fin tech, and gaming segments also remained active during the month. Other big deals in July included Dhanuka Laboratories-Orchid Pharma, Patanjali-Soya Ruchi, and Asian Colour-JSW.