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Analysis

US divestitures quarterly update

Explore Q1 and Q2 2020 reports

Divestitures can be a key part of a company’s strategy, helping to refocus the business and improve overall performance. Divestiture mergers and acquisitions (M&A) news provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on US and global divestiture trends.

US divestitures Q2 2020

Our quarterly update focuses on news and trends in the following areas:

  • US divestiture volume, value, and reported multiples
  • US divestitures by buyer type
  • US divestitures by industry
  • Cross-border activity

Previous quarters
In Q1 2020, COVID-19 had a severe negative effect on macroeconomic trends, yet divestiture activity had yet to be drastically affected. Learn more about the trends in Q1 by downloading the full report.

Overall trends

The impact of COVID-19 on divestiture activity has been apparent through Q2 2020, following relatively stable levels in Q1 2020. Uncertainty surrounding the epidemic has slowed M&A activity as a whole, with the number of transactions falling from more than 2,200 in Q1 2020 to about 1,500 this past quarter. As expected, divestiture activity has followed suit, reaching 10-year lows in volume and value. As a percentage of total M&A, Q2 2020 divestitures have seen a slight uptick as a percentage of total volume, rising to 21 percent compared with 18 percent at the same time last year.

Divestiture size distribution has made a shift to smaller deal activity as corporations focus on noncore asset carve-outs. This quarter has witnessed a jump in the ratio of technology and consumer products transactions, reflecting the overall sector trends that have picked up during COVID-19. Overall, divestiture activity has followed macroeconomic trends and is anticipated to increase as companies shore up their business portfolios and strategic direction becomes a bit clearer.

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Global activity

While acquirors of divested US businesses continue to be predominantly based in the United States, COVID-19 has significantly affected the number of completed deals, as evidenced by the 21 percent drop in total year-over-year transactions from Q2 2019 to Q2 2020. Canada and the United Kingdom remained the most active acquiror countries by volume, but both experienced a meaningful decrease in deals on a year-over-year basis.

Europe, as a whole, saw a 46 percent decrease in activity over the same time frame in 2019. The rest of Europe also saw a significant decline in year-over-year deal volume. China’s activity continues to slow, closing no deals in Q2 2020 off a quarterly high of five deals in Q3 2018. Japan and South Korea, on the other hand, experienced a slight increase in completed deals from Q1 2020, with both closing two in Q2 2020.

Connecting dots

This newsletter is a periodic compilation of certain completed and announced merger and acquisition activity. Information contained in this newsletter should not be construed as a recommendation to sell or a recommendation to buy any security. Any reference to or omission of any reference to any company in this newsletter shall not be construed as a recommendation to sell, buy, or take any other action with respect to any security of any such company. We are not soliciting any action with respect to any security or company based on this newsletter. This newsletter is published solely for the general information of clients and friends of Deloitte Corporate Finance LLC. It does not take into account the particular investment objectives, financial situation, or needs of individual recipients. Certain transactions, including those involving early stage companies, give rise to substantial risk and are not suitable for all investors. This newsletter is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Prediction of future events is inherently subject to both known risks, uncertainties, and other factors that may cause actual results to vary materially. We are under no obligation to update the information contained in this newsletter. We and our affiliates and related entities, partners, principals, directors, and employees, including persons involved in the preparation or issuance of this newsletter, may from time to time have “long” and “short” positions in, and buy or sell, the securities, or derivatives (including options) thereof, of companies mentioned herein. The companies mentioned in this newsletter may be: (i) investment banking clients of Deloitte Corporate Finance LLC; or (ii) clients of Deloitte Financial Advisory Services LLP and its related entities. The decision to include any company for mention or discussion in this newsletter is wholly unrelated to any audit or other services that Deloitte Corporate Finance LLC may provide or to any audit services or any services that any of its affiliates or related entities may provide to such company. No part of this newsletter may be copied or duplicated in any form by any means, or redistributed without the prior written consent of Deloitte Corporate Finance LLC.

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