Divestiture M&A news, divestiture trends

Analysis

Divestiture M&A news: 2015 Q4 recap

Global divestiture market strength continued in 2015

For some companies, divestitures and carve-outs are part of an important strategy to refocus their businesses and improve overall performance. Divestiture M&A News provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on US and global divestiture trends.

Divestiture activity remains strong globally

Trends include:

  • The 12,701 global divestitures completed in 2015 represented 39 percent of worldwide M&A volume in 2015, which was a slight decline from 2014, but greater volume than in either 2012 or 2013
  • Divestiture activity has historically remained strong during recessions and market downturns relative to broader M&A activity, with volume relative to non-divestiture-related M&A increasing in each of the last three recessions (’90-’91, ’01, ’08-’09)*

* Thomson Financial​

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Industrials lead divestiture deal volume

Trends include:

  • With 438 divestitures announced in Q4 2015, industrials has been the most active industry in carve-out activities*
  • The top three industries, industrials, real estate, and financials accounted for more than 36 percent of total volume
  • The total announced value of 2015 Q4 divestitures was $409 billion*

* Thomson Financial​

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Average divestiture EV/EBITDA multiples increase

​Trends include:

  • Average disclosed EV/EBITDA multiples increased significantly from 2014 to 2015 due to higher average valuations and lower earnings*
  • For the second time since 2010, average EBITDA multiples for divestitures exceeded average transaction multiples for traditional transactions
  • Divestiture EBITDA multiples also continued to exceed the average EBITDA trading multiple for the S&P 500 Index, highlighting the valuation premiums divestitures often deliver compared to businesses as a whole

Thomson Financial

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Strategic buyers drive the majority of carve-out deals

Trends include:

  • Strategic sponsors remained the largest purchasers of carve-outs, representing 64 percent of all buyers in 2015
  • Over the past five years, financial sponsor purchases have increased by 12 percent while strategic buyer activities have decreased by 5 percent, indicating that financial sponsors are playing a more important role in the global divestiture market

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