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Analysis

US divestitures quarterly update

Q1 2020 and 2019 year in review

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 Q1 2020 and 2019 year in review

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

In 2019, US divestiture activity continued the trends unfolding over the last few years. Download the 2019 year in review report.

Overall trends

Although COVID-19 had a severe negative effect on macroeconomic trends in Q1 2020, divestiture activity has yet to be drastically affected.1 Divestiture volume in 2020 dropped from 135 deals in February to 123 deals in March, a trend paralleled last year with February and March 2019 volumes of 142 and 126, respectively. As a percentage of total M&A, Q1 2020 divestitures were in line with 2019 at 19 percent after the slight uptick in activity to 21 percent in Q4 2019. Transaction size continues to average on the small-to-mid-sized transaction end of the spectrum. The majority of disclosed transactions represent valuations below $250 million which continues to attract private equity investors who swept up about 27 percent of the transactions in Q1 2020.

Man drawing a graph

Global activity

Acquirors of divested US businesses continue to be predominantly based in the United States, evidenced by an approximately five percent increase in domestic acquirors since Q1 2019. Canada and the United Kingdom remained the most active acquiror countries by volume, with Canada experiencing a meaningful decrease and the United Kingdom a meaningful increase on a year-over-year basis.

Europe, as a whole, saw increased activity over the same time frame in 2019, as continental Europe saw a meaningful increase in activity. China’s activity continues to slow, closing only one deal in Q1 2020 off a quarterly high of five deals in Q3 2018. With China activity slowing, France, Netherlands, and Israel were the biggest winners with each experiencing increases in closed deals compared with Q1 2019.

Connecting dots

References

Thomson ONE, https://www.thomsonone.com, accessed April 15, 2020, data as of March 31, 2020.

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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