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.
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- US divestitures 2019 year in review
- Overall trends in divestiture
- Global activity
- References
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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.
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.
References
1 Thomson ONE, https://www.thomsonone.com, accessed April 15, 2020, data as of March 31, 2020.
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