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.
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.
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