While global economic growth has increased in the past few years, mining M&A activity has not seen a similar increase. However, a report published by KPMG on mining M&A activity during the second half of 2017 shows that business conditions appear to have improved for the mining sector. KPMG believes that mining companies’ focus on correcting their balance sheets and winning back investors have had a positive impact on their cash accounts and have given mining companies some flexibility to become more active in acquisitions. Comparing M&A activity from July to December 2017 to that of the first half of … Continue Reading
A month into the new year, speculation continues regarding the forces that will shape mergers and acquisitions (M&A) for 2018. EY recently released a report (the Report) forecasting possible M&A trends in the life sciences sector. As noted in the Report, while the total volume and value of M&A in the life sciences sector fell in 2017, the value of M&A in medtech increased 50%, driven by the pursuit of economies of scale in the therapeutic device market. Now, with newly implemented policies, such as tax reform in the United States, as well as other favourable … Continue Reading
The impending legalization of cannabis has weighty implications for the Canadian economy, but may also impact the global markets more broadly. Capital markets, the jobs market, mergers and acquisitions activity and intellectual property, among others, stand to be significantly affected.
This is an unprecedented opportunity for the country to be the global leader in the cannabis space, to shape the regulatory framework for cannabis around the world and to spur innovation and economic productivity – The Report
Following the most … Continue Reading
As the government prepares for legalization of recreational marijuana this summer, Canada’s cannabis producers and distributors are bracing themselves for a period of consolidation leading up to and following legalization. A recent report published by Ernst&Young (EY) provides insight into the current state of Canada’s cannabis industry. EY surveyed 11 licensed producers and found that many of those surveyed believe that consolidation in the cannabis industry is inevitable due to the high barriers for new players. Two of the biggest hurdles cannabis producers and distributors face is difficulty obtaining financing from banks and the slow speed at which … Continue Reading
In a recently released report, the Global Capital Confidence Barometer, EY suggests that M&A intentions in the global oil and gas sector are at an all-time high. Most notably, 69% of the oil and gas executives surveyed indicated that they intend to pursue acquisitions in the next 12 months. This is the highest figure recorded since 2009, when EY first launched the Barometer.
These figures will likely be of particular importance for the Canadian M&A market, given its heavy focus on energy.
The Report: oil & gas M&A findings
The Barometer is a twice-yearly survey compiled of nearly … Continue Reading
Automotive technologies are evolving rapidly and impacting not only drivers’ automotive experiences but also, the automotive industry more broadly. From assistive technologies like bicycle sensors and back-up cameras to self-driving technologies, it appears that technological innovation will be critical in order for automotive companies to maintain their relevance and competitive edge in the marketplace. However, such innovation is complicated and largely outside of the auto industry’s wheelhouse. As a result, merger and acquisition (M&A) activity may be just the tool that these companies need for harnessing this innovation and competing effectively.
The automotive industry transformation
As alluded to … Continue Reading
Canada’s stance on protectionism
Repeated headlines in the past year related to President Trump and his “America First” strategy and the struggles faced by British Prime Minister Theresa May as she leads Britain post-Brexit have convinced many that protectionism now pervades the new world order. Not only are restrictions on physical borders imposed, the flow of investments and trade are inevitable topics being negotiated vehemently by world leaders.
Despite the protectionist rhetoric expressed throughout the globe, Bank of Canada Governor Stephen Poloz argued that “committing to openness has always been the right choice” because “[Canada’s] history shows that it takes … Continue Reading
Big data analytics (big data) has established a reputation as a tool useful in the financial services arena, where it has enhanced banks’ abilities to personalize data of their customers to predict trends. More recently, big data is becoming popular in the context of mergers and acquisitions in all sectors.
What is big data analytics?
Big data refers to the collection and analysis of large volumes of structured and unstructured data, in real-time to create value for companies. Big data’s opportunity to leverage unstructured data is the real value-add it provides for companies. Unstructured data refers to … Continue Reading
According to reported results from E&Y’s recent Global Capital Confidence Barometer survey, Canada’s mergers and acquisitions (M&A) market is expected to remain strong despite the current climate of geopolitical uncertainty, with 62% of Canadian respondents actively pursuing deals (compared to 48% six months ago). It was also reported that, for the fifth time in a row, Canadian respondents expect to pursue acquisitions at a rate above the past average, with Canadian, U.S. and global respondents reporting being bullish on the Canadian and global economy. The report noted that, while 2016 M&A activity did not exceed 2015, a strong … Continue Reading
2017: the year of social media fails. Over the last six months, an international air carrier’s stock plummeted following a viral video of security forcefully removing a passenger from a plane. Then, Twitter was used to publicly assail a soda pop company for its lack of judgment in releasing a commercial depicting a celebrity subduing a crowd of protestors with a can of pop.
Before committing to a transaction, a prudent buyer will want to know any and all potential risks associated with the target. While social media can play a positive role in a company’s business strategy, it, evidently, … Continue Reading
New cybersecurity requirements for Department of Financial Services (DFS)-regulated entities took effect on March 1, 2017. The New York DFS created these requirements in response to recent or potential threats to sensitive electronic information, particularly financial information and private consumer information. EY’s report provides an overview of the new framework with implications for the affected entities. A main goal is to protect information systems of the affected entities and the non-public information stored in those systems.
The new cybersecurity requirements include indications for the below-noted areas. An annual statement certifying compliance with these requirements must be submitted to … Continue Reading
Global M&A activity in the biopharmaceutical industry skyrocketed in 2014 and 2015, eclipsing US$200 billion in deal value each year and prompting EY to declare such elevated activity to be the “new normal” in the industry. After another strong year in 2016, big pharma companies now appear poised to carry this trend into 2017. In fact, according to EY’s M&A Outlook and Firepower Report 2017 (the Firepower Report), both the pressures on big pharmaceutical companies to pursue inorganic growth, and the ability of these companies to execute strategic acquisitions, are higher than they have been at any … Continue Reading
In today’s market, there is significant buzz around phrases such as automation, artificial intelligence, cloud computing, robotics and the like. Many businesses are investing in the fast-paced technology sector and innovating outdated systems for customer engagement. For example, earlier this year, the first U.S.-based robotic café opened its (figurative) doors to patrons in San Francisco, serving reasonably priced espresso drinks with a robotic arm behind a large pane of glass. Only one human is present to administer the machine and assist customers with orders. With the changing face of consumer interaction, it is demanded of businesses to act progressively, so … Continue Reading
KPMG LLP’s survey predicts M&A deal levels in 2017 will be steady from 2016, with the technology industry leading expectations for high activity. This follows from 2016’s profile for tech M&A deals, which had EY’s Global technology M&A report for Q3 2016 highlighting digital technologies as driving tech M&A deals for both tech and non-tech companies. Digital technologies that drove deals include internet of things (IoT), smart mobility, cloud/SaaS, big data, security, advertising and marketing technologies, connected cars, payment and financial technologies, gaming, and health care IT.
In Q3 2016, the average value per tech M&A deal was … Continue Reading
EY’s review of Q3 2016 deal activity within the power and utilities (P&U) sector shows ongoing stability to be expected into 2017. Highlights from the quarter include ongoing premiums on prices for regulated assets, increased investment in renewables and diversification into disruptive technologies.
Regulated network assets (i.e., transmission and distribution assets) are described as “safe havens” for investment, translating into transactions worth US $23.6 billion in Q3 2016. EY reports that this sum accounted for more than half of the quarter’s overall deal value. Investors view regulated network assets as stable with long-term returns in a … Continue Reading
As we begin 2017, the 1,000 corporate and private equity executives surveyed for Deloitte’s M&A Trends Year-end report 2016 display optimism for the coming year. The survey was conducted in September 2016 and included participants from companies or private equity firms with annual revenues of $10 million or more, representing 18 industries.
Respondents expect a rebound year from 2016, with 86% of surveyed private equity and 71% of surveyed corporate dealmakers expecting to close more deals this year. Not only is deal volume expected to increase, but 64% of all respondents also expect deal size to increase. Divestitures appear poised … Continue Reading
In recent years, cross-border M&A activity involving Canadian companies has soared, and 2016 gave rise to a record high in cross-border deal value. In Q3 2016 alone, Canadian companies were involved in cross-border transactions worth over CDN$77.7 billion, easily eclipsing the CND$21.7 billion in deal value from the previous quarter and representing 41% of all Canadian announcements. In particular, outbound deal volume continued to outpace inbound deal volume by a ratio of 1.7:1, confirming to Ed Giacomelli, Managing Director at Crosbie & Company, “the strategic importance to Canadian corporations of growth by acquisition.”
As 2016 draws to a close, Ernst & Young has released its 15th edition of its Global Capital Confidence Barometer (the GCCB), which looks forward toward the trends and expectations in the M&A market for 2017. The GCCB is survey of more than 1,700 senior executives, including 52 Canadian executives, from large global companies located in 45 countries around the world, representing 18 industry sectors.
This past year was an active time for M&A and according to the GCCB, this trend will continue into the new year. In total, 57% of all executives surveyed plan to make acquisitions … Continue Reading
In the days leading up to the June 23, 2016 Brexit referendum, we discussed Brexit’s potential impact on the M&A market: Britain without the EU: how will Brexit affect dealmaking? Today, we take a look at how those predictions have held up five months after the historic vote.
Domestic UK M&A down 62%
As predicted, economic and political uncertainty has created a hostile deal environment for domestic UK M&A. According to Thomson Reuters, the value of deals between UK companies has dropped 62% since the vote to a 30-year low. A lack of large deals may be to blame … Continue Reading
In December 2015, we reported on the record-setting M&A activity in the life sciences sector in 2015. In a post last month, we also reported on a recent surge in M&A deals in the pharmaceutical industry, including $40 billion worth of deals announced in one day. Now, a recent report by EY suggests that while the flurry of M&A activity may be tapering off, company expectations remain high with respect to future deals in the life sciences industry.
In particular, the report notes that 45% of life sciences executives surveyed are still expecting to pursue acquisitions over the … Continue Reading
EY has released the 14th edition of the Media and Entertainment (M&E) Global Capital Confidence Barometer (the Report) which concludes that M&A activity will become an important piece to value creation strategies given the current subdued economic environment. The survey canvassed a panel of more than 1,700 executives in 45 countries of which 75 respondents represented the M&E industry.
Zero percent of the respondents expect strong growth in the economy, down 23% from six months ago. In this context, M&E companies are expected to proactively explore growth options by pursuing bolder and more novel strategies such … Continue Reading
Despite a number of challenging economic headwinds, the market’s desire for mergers and acquisitions remains strong, and analysts expect mergers and acquisitions to remain one of the major drivers of corporate growth. Ernst &Young (EY) recently published a report entitled “Global Capital Confidence Barometer, Buying and bonding: Alliances join M&A as engines of growth” which describes why the appetite for M&A remains strong despite economic stagnation and slow growth rates.
The report identifies a number of market factors which are keeping demand for M&A high, including:
- The closing of the valuation gap: The valuation gap
Divestment is one strategy that a corporation can use to unlock funds for future growth and create long‑term shareholder value. According to a recent E&Y study, a successful divestment must meet three criteria: (i) it must create a positive impact on the valuation multiple of the remaining company; (ii) it must generate a sale price above expectations; and (iii) it must close ahead of its timing expectations. Only 19% of the companies surveyed for the study met all three criteria. Considering that divestiture activities are likely to increase in 2016 (a more detailed discussion on 2016 divestiture outlook can … Continue Reading
E&Y recently released its “first look” at its Global Technology M&A Report for the fourth quarter of 2015. The year ended on a strong note for value, setting the all-time record of an annual grand total of US$459.6 billion in technology deals. This number exceeds by a whopping 11% the previous all-time record, set at the height of the dot-com boom in the year 2000. Volume has increased year-over-year compared to 2014 by 14%, but it does not appear to have set any new records, and in fact declined in the fourth quarter year-over-year compared to 2014 and compared to … Continue Reading