Tag archives: PwC

M&A in the food industry

As the market changes, so must the food industry, and this has become evident in the M&A trends of the food and beverage sector. A PWC report entitled “An Appetite for M&A” outlines the challenges facing the food industry and how they impact M&A activity.

Five challenges are identified as forcing change in the food industry:

  1. Low growth in mature markets. The food industry has not recovered from the recession, which encouraged consumers to seek lower-priced goods, and forced manufacturers and retailers to maintain or lower prices.
  2. Pressure on margins. Despite the pressure to keep prices
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Divestitures: minimizing transition costs and maximizing value

Divestitures present unique challenges that make it difficult for companies to realize full value potential. Even companies with established competency in M&A transactions can struggle to optimize value.

A report from PwC’s Deals Divestiture practice identifies three primary sources of divestiture deal value.

Transaction proceeds

Transaction proceeds are generated from the sale of the divested business (less investment banking, legal, and advisor disbursements). These proceeds are typically the most obvious source of value that companies look to in effort to maximize deal value.

Transition costs

An understanding of transition costs can enhance a company’s negotiating position and serve to avoid … Continue Reading

Life sciences M&A sees new heights in 2015

2015 continues to see record-setting activity in both the frequency and value of M&A deals involving pharmaceutical companies, and generally in the life-sciences sector. According to a report published by PricewaterhouseCoopers, the combined value of closed M&A deals in the life-sciences and pharmaceutical sector surpassed USD $320Bn in the first three quarters of 2015. Further, a recently announced inversion deal between two major players in the pharmaceutical space has been valued at USD $155Bn. If successful, this will be the largest inversion deal in any sector, and the largest M&A deal in the history of the life-sciences sector.

Against … Continue Reading

Performance incentives for portfolio companies

Private equity investors (PEIs) when investing in new portfolio companies, seek to align management’s interests with that of the PEI to grow the value of the portfolio company and achieve a profitable return in the investment upon exit.

Typically, PEIs incentivize management to adopt such interests through compensation arrangements in  the form of performance incentives. Generally, PEIs will grant management an interest in the growth in value of the company via an interest in the equity of the company (e.g., stock options or performance shares) or in the profit/proceeds of the company, the latter of which is … Continue Reading

How can companies retain talent during M&A?

Jimmy’s biotech company was doing well. A deal was on the table for a massive pharma conglomerate, Massive-Pharm, to purchase his company via an asset purchase agreement. Everything was going well, that is, until Jimmy’s top sales star, Terry, leveraged the impending purchase to secure a better-paying position at Jimmy’s competitor. After Jimmy’s company lost Terry, Massive-Pharm pulled the deal.

Believe it or not, Jimmy’s situation is not an entirely uncommon one in the M&A world. Purchase agreements often contain legal clauses allowing acquiring companies to back out of deals should the target company lose key employees prior to closing. … Continue Reading

What’s mine is yours

You may be familiar with a parent’s teaching to “share” with others – “sharing is caring”. This teaching has been a part of our economic system throughout history; bartering and sharing of goods is not a new concept. However, in recent years, “sharing” has entered the marketplace in new and innovative ways, primarily by facilitating elaborate peer-to-peer networks. Many businesses rely on the concept of collaborative consumption to create value for shareholders, and have been highly successful in doing so. Some of the sharing economy pioneers include Airbnb, Uber and Spotify.

The sharing economy is a socio-economic ecosystem that is … Continue Reading

A closer look at exit strategies for privately held companies

For every privately held corporation, one of the most difficult, yet unavoidable decisions, will be implementing an exit strategy. In a recent five-part series titled Realizing shareholder value: Private company exit strategies, PwC identifies and explores the principal stages of developing a successful exit strategy: (1) making the decision to sell; (2) finding the right buyer; (3) preparing the business for sale; (4) the deal process; and (5) preparing for life after the deal.

  1. Making the decision to sell. Every ownership group can have different reasons to plan an exit, be it retirement, financial pressures or the desire to
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Oil & gas M&A activity in Q1 2015: review and outlook

According to PWC’s First-quarter 2015 oil & gas industry mergers and acquisitions analysis report, mergers and acquisitions activity in the oil and gas industry stalled in the first quarter of 2015. The large swing in oil prices over the past 10 months has been a major factor in continued low deal volumes with 39 oil and gas deals (valued at over $50 million) representing a total value of $34.5 billion in Q1 2015 as compared to 70 deals with a total value of $103.5 billion for the same period a year earlier. While the number and value of deals in … Continue Reading

The return of the REIT

M&A activity involving real estate investment trusts (REITs) is heating up in Canada and south of the border, according to a recent PWC report, “Emerging Trends in Real Estate: Global Outlook for 2015”. Following a succession of REIT conversions in 2014 by companies with significant real estate holdings, coupled with ripe market conditions for REITs, the industry is well-positioned for further consolidation.

To merge or to acquire?

A notable trend among REITs in 2014 was the acquisition of small and mid-sized players by larger companies, ostensibly fueled by increasing shareholder activism.  At the same time, small and … Continue Reading

Aerospace and defense M&A returns to cruising altitude

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CaptureFollowing a pullback in fiscal year 2013, deal activity in the global aerospace and defense (A&D) sector has returned to its former levels.

According to PwC’s Mission Control report for Q4 2014, the past year witnessed the total A&D deal value rebound from $14.3 billion in 2013 to $22.3 billion in 2014, which is on par with the 10-year rolling average.

Canada is a major player in the A&D sector: historically it is fifth, behind the United States, France, the United Kingdom and Germany in total revenue generated by A&D but second, behind the United States, in … Continue Reading

Metals sector: a year in review and forecast for 2015

With Q4 2014 results in for the mining sector, industry focus can shift to what lies ahead in 2015. PwC recently released a report, “Metals Deals: Forging Ahead 2015 outlook and 2014 review” (the PwC Report) which includes a look back at the metals deal statistics in 2014 and provides some insight into what we can expect to see in 2015 in the global metals sector.

Unsurprisingly, the 2014 metals deal analysis was discouraging, with global deal value dropping 52%, from US$34.8bn in 2013 to US$16.8bn in 2014. To put this figure further into perspective, the PwC Report states … Continue Reading

U.S. retail and consumer deal insights: overview of 2014 and outlook into 2015

Deals in the U.S. Retail and Consumer (R&C) sector boasted another strong year in 2014 with an increase in both transaction volume and value over 2013 figures.

2014: a year in review

According to PwC’s recent report US Retail and Consumer Deal Insights: 2014 Year in Review and 2015 Outlook, 2014 saw a total transaction value surpassing the $100 billion mark for the second year in a row, setting a new five-year high largely due to several mega-deals and an extremely active Q3-2014.

Both deal value and deal volume exceeded 2013 values with deal volume up 13% … Continue Reading

The falling Canadian dollar: how will it affect M&A activity in Canada?

dollar-image2The Canadian dollar has taken a tumble in 2015 – dropping from approximately eighty-five cents to flirting around and even below eighty cents as compared to the American dollar. Analysts are blaming not only sinking oil prices, but also the Bank of Canada’s dovish monetary policy. On January 21st, the Bank of Canada cut its rate on overnight loans between commercial banks by one-quarter of a percentage point to 0.75%. The cut was unexpected as the rate had been at 1% since September 2010, and was last cut in April 2009. The Bank of Canada said its decision … Continue Reading

M&A in the media and entertainment industry: going over the top

E&Y has reported that the media and entertainment (M&E) industry will experience a record high number of M&A deals in the coming year.The report surveyed executives associated with film, television, gaming, and print and digital media. Forty percent of respondents are anticipating acquisitions, with more deals in the pipeline thereafter.   

Inorganic growth can be a way for companies to explore opportunities related to intellectual property, technology, new geographical markets, and content. M&A is particularly attractive in the current Canadian market. We are seeing confidence in the stability of the economy; a sign that companies may be making more … Continue Reading

Hot market report: M&A potential for auto dealerships

In their Q3 2014 Capital Markets Flash, PriceWaterhouseCooper (PwC) reports that
“[t]here’s a lot of positivity within the Canadian auto dealership industry, which should come as no surprise given record sales that were almost unimaginable a few short years ago.” Since PwC’s Q3 update, the Canadian Automobile Dealers Association (CADA) published the industry’s October economic report, and the numbers keep looking better.

The Canadian light vehicle market has set seven consecutive monthly sales records with total sales 6% above 2013’s record setting numbers and truck sales increasing by 10%. Revenues at dealerships are also setting … Continue Reading

PWC predicts moderate growth in Canadian M&A

In its Q2 2014 Capital Markets Flash: Canadian M&A Deals Quarterly, PricewaterhouseCoopers forecasts moderate growth in Canadian economy in the next year and a half. It predicts the rate of real economic growth in 2015 to be 2.5% compared to 2.2% in 2014 and 2.0% in 2013; it projects that government spending will increase 1.5% in 2015, compared to 1.0% and 0.4% in 2014 and 2013, respectively; and it anticipates that the biggest change will be in business investment growth, which is anticipated to be a significant 4%, compared to 1.5% in 2014 and 1.4% in 2013. 

In the … Continue Reading

M&A activity continues to rise in Q2 2014

Recent reports by Mergermarket and Pricewaterhouse Coopers (PwC) have confirmed the positive forecasts for M&A transactions in Q2 2014.  Globally, deal volume has reached its highest level since 2007.  North America, in particular, has seen a strong amount of activity with a number of megadeals listed in the top 10 deals in the world.

North American M&A Review

Mergermarket recently published its Monthly M&A Analysis Insider detailing the robust increase in deal value in Q2 2014.  In North America, there was a 40.6% increase over Q1 2014 in M&A value.  In total, there were 1,291 transactions worth US$430.1 … Continue Reading

M&A activity in renewable power sector signals growing optimism about viability of renewables

Hydro towersAt the Indo-Canada Chamber of Commerce Awards Gala this past weekend, the High Commissioner of India to Canada, Nirmal Vermal spoke enthusiastically about India’s interest in promoting renewable power development, and also indicated that India would draw from the experiences of countries such as Canada to inform its renewable policy decisions. Mr. Vermal’s comments are significant for two reasons: first, they highlight the extent to which renewables are no longer just the pet projects of developed economies; and second, they reflect a tacit recognition that the developed economies’ initial policy endeavours in this area, while undoubtedly successful in promoting renewables … Continue Reading

Food & beverage M&A stays thirsty in 2014

According to the Q1 2014 Capital Markets Flash published by PWC, there has been a 45% increase in the number of deals in the Canadian food and beverage industry in March 2013-2014, as compared to a year prior. This healthy activity is also seen in the US, where deals in the food and beverage sector were valued at approximately $40 billion in Q1 alone, and in Europe where there were 292 deals in the last 12 months and a 50% increase in deal volume from Q4 2013 to Q1 2014.

Deals over the past year have ranged from … Continue Reading

M&A in the insurance industry

Mergers and acquisitions in the insurance industry are a big deal. Insurance companies range from small, regional private companies to large, international publicly-traded corporations with market capitalizations in the billions of dollars. When two companies decide to merge, or one company purchases part of another company, transactions can reach multi-billion dollar levels.

In a fiercely competitive industry with mature and established businesses, such transactions can be quite attractive because of the growth they offer the acquirer (and the capital they offer the seller). However, the insurance industry is highly-regulated, subject to numerous legal statutes and centuries of case-law, and sometimes … Continue Reading

Tech megatrends of Q3 2013: to Q4 and beyond?

Q3 2013 in the technology M&A sector

With a quiet Q1 and Q2 in the technology M&A space, Q3 2013 brought a pleasant surprise with its surge of deal activity, making for a healthy (and busy) end of year for the sector and raising hopes that the momentum will carry into 2014, surpassing the prosperous 2012 numbers, and making next year the year of the tech deal.

Q3 dominated this year in both volume and value for technology sector deals in the U.S, the global technology hub, with volume up 97% and value up $433 million from Q2. While … Continue Reading

Q3-2013 Canadian M&A activity: the results are in

The results are in for Q3-2013 Canadian M&A and the outlook is decidedly mixed. While Q3 M&A activity rose sharply on a value basis as compared to Q2-2013, Q3 volume was down from last quarter and overall 2013 M&A remains in a slump at the lowest levels in nearly a decade.

Mergermarket’s Canadian M&A trend report highlighted some less than ideal statistics for the Q1-Q3 period, stating that M&A activity during the period actually fell to the lowest levels since Q1-Q3 2004 and was down 34.6% from the same period in 2012. However, it went on to indicate that so … Continue Reading

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