Divestitures, Mergers, and Alliances Report: Increasing Returns (Boston Consulting Group)

Summary

• Total transaction value jumped more than 20% to almost $2 trillion in 2014.§2
• Total deal value in the first half of 2015 reached 65% of total deal value in all of 2014.§2
• There were 14 megadeals completed in 2014, with an aggregate value of $262.3 billion, or 14% of the total.§2
• North America racked up nearly $1 trillion in total deal value, an 18% increase over 2013.§2
• Three withdrawn or terminated offers aggregating almost $300 billion represented some 15% of the year's total deal value.§4
• Median EV/EBITDA multiples stood at 12.3 in 2014, above the 25-year average of 12.0.§5
• The number of private-equity deals rose 16% in 2014 to a record 4,590, with value up 18% to almost $550 billion.§5

Key insights

1. The drop in deal value from the past two market peaks was more than 80% within 18 months.§1
2. Google completed more than 30 deals in 2014, including Nest Labs and Skybox Imaging.§3
3. Takeover premiums as high as 31% made high tech the hottest M&A market in 2014.§3
4. Energy companies must reposition for oil in the $40- to $70-a-barrel range, rather than $100 to $120 a barrel.§3
5. Almost a quarter of announced deal value failed to reach consummation in 2014.§4
6. Average excess returns were 0.6% for acquirers and 19% for targets at announcement.§4
7. Average takeover premiums of 27.7% in 2014 were still about 4 percentage points below the longtime average of 32%.§5
8. The average leveraged buyout in 2014 included 36.9% equity, slightly above 35.6% in 2013.§5