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Divestiture M&A News 2016 Q1

Global divestiture market experienced a slower start to 2016

Divestitures can be a key part of a company’s strategy, helping to refocus the business 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 starts slow

Trends include:

  • ​Divestiture activity declined in 2016 Q1 vs. 2015 Q4, continuing a seasonal pattern experienced in the first quarters of 2014 and 2015. Should the historical cycle trend continue, M&A volume will recover in the second quarter.
  • ​2016 Q1 divestiture volume declined by 8.6 percent compared to 2015 Q4, while non-divestiture M&A volume declined by 23.2 percent, demonstrating resilient demand of divestiture transactions relative to non-divestiture transactions.

Industrials remain the most active sector

Trends include:

  • With 445 divestiture transactions announced in 2016 Q1, the industrials sector continues to be the most active, representing a 1.6 percent increase in deal volume compared to 2015 Q4.1
  • Industrials, real estate, and energy and power sectors increased as a percentage of total volume, while the financials and materials sectors declined by 4.4 percent and 2.5 percent respectively quarter-over-quarter.

Divestiture sector activity (by target) 2015 Q4 vs 2016 Q1
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Asia-Pacific buyers drive Q1 divestiture activity

Trends include:

  • Significant Chinese activity resulted in Asia-Pacific buyers closing 39.8 percent of all divestiture transactions in 2016 Q1 due to increased interest in energy and technology assets, displacing American buyers as the largest acquirer group by volume.2
  • American buyers closed approximately 35.7 percent of total divestiture deals in 2016 Q1, similar to the region’s share in 2015 Q4.
  • ​European buyers were less active in divestiture acquisitions in 2016 Q1, closing only 18.6 percent of all transactions vs. 30.9 percent in 2015 Q1. This decline was likely driven by continued weak macroeconomic conditions across Europe.

2015 Q1 vs. 2016 Q1 global divestiture acquiror region changes
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More divestitures captured by strategic buyers

Trends include:

  • ​Strategic acquirors have increased divestiture-related acquisition activity from 60.5 percent of all transactions to 73.8 percent.
  • ​In 2016 Q1, only 26.2 percent of divestiture transactions were closed by financial sponsors, representing a 33.7 percent decrease from 2015 Q1 due to a significant decrease in leverage buyout volume.3

2015 Q1 vs. 2016 Q1 changes in divestiture acquiror types
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1 Total M&A multiple averages include divestiture multiple averages
2 Thompson Financial
3 Deloitte Analysis

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