US divestitures quarterly update
Explore the Q2 2021 update
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.
M&A and divestiture activity has continued to build on its momentum in Q2 2021. Divestiture volume jumped to 639 deals in Q2 2021 compared with 474 in Q2 2020. As the pandemic has continued to reshape the business environment and company strategy, divestitures have remained an important tool for companies to focus attention and investment around core business operations. Divestitures have simultaneously served as a means of improving capital structure through cash infusion and debt paydown, evidenced by the continued decline of the S&P 500’s debt/EBITDA ratio over the five quarters since the pandemic began. Divestiture activity shifted toward smaller transaction sizes, with divestitures of less than $250 million increasing by 15% over Q1 2021 to 42% of divestitures. Likewise, divestitures in excess of $1 billion decreased by 14% from 40% of divestitures in Q1 to 25% in Q2. Overall, M&A and divestiture activity is poised to remain strong in the second half of 2021 as companies continue to grapple with rapidly evolving competitive landscapes.
Q2 2021 witnessed a shift in divestiture activity away from overseas acquirors toward North American acquirors. In the Americas, divestiture activity increased 8.3% over Q1 2021, with 550 transactions completed. US buyers completed 518 deals, up from 487 in Q1 2021, followed by Canada with 28 deals, increasing precipitously from 16 in Q1 2021. Divestitures to European and Asian buyers declined by 13.2% and 16.7% from Q1 2021, respectively, with European buyers completing 46 divestitures and Asian buyers completing 15. In Europe, the United Kingdom continues to be the most active acquiror, with 19 deals completed, up 72% from 11 in Q1 2021. The United Kingdom was followed by Sweden, which completed six transactions, doubling its Q1 2021 total. In Asia, China returned to previous levels of activity, with Chinese acquirors completing four deals, following a Q1 2021 without a single US divestiture acquisition. India followed China with three deals completed, trailed by Japan, South Korea, and Singapore with two deals each.
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