M&A
Report
1Q 2018
Contents
Key Takeaways
2
Overview
3
Spotlight: Healthcare
5
Deals by Region & Size
7
Spotlight: Divestitures
8
Credits & Contact
PitchBook Data, Inc.
John Gabbert Founder, CEO
Adley Bowden Vice President,
Market Development & Analysis
Content
Dylan Cox Senior Analyst, PE
Darren Klees Data Analyst
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methodologies.
$616.7B
total value across
North America and
Europe in 1Q
Key takeaways from the analysts
After a strong 2017, M&A activity
got off to a sluggish start in the first
quarter of this year. Across North
America and Europe, 4,867 deals were
completed in 1Q 2018, totaling $616.7
billion in value18% and 25% year-
over-year decreases, respectively.
Though the pace of completed
corporate divestitures was rather
slow in 1Q 2018, 463 divestitures
totaling $149.0 billion have been
announced but have yet to close. We
expect divestiture activity to increase
during the remainder of the year, as
companies look to slim down after the
recent buying binge.
B2C transactions accounted for just
15.9% of deal flow in 1Q 2018. Interest
in traditional B2C assets has dwindled
as tech-focused firms continue to
make their mark on consumer-facing
businesses. Further, businesses that
were once thought of as traditional
B2C, such as retail, are now created as
tech-focused ecommerce firms.
$149.0B
total value of
announced divestitures
15.9%
of total deal flow in
B2C, a slow start
relative to prior full-
year tallies
PITCHBOOK 1Q 2018 M&A REPORT
2
4,867
0
5,000
10,000
15,000
20,000
25,000
30,000
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal value ($B)
Es mated deal value ($B)
Deal count
Es mated # of deals closed
21, 119
After a strong 2017, M&A activity
got off to a sluggish start in the first
quarter of this year. Across North
America and Europe, 4,867 deals
were completed in 1Q 2018, totaling
$616.7 billion in value18% and
25% YoY decreases, respectively.
Though completed deal count slid
substantially, an additional 973 deals
totaling an estimated $451.3 billion
have been announced but have yet
to close. On that account, combined
with the knock-on effects of corporate
tax cuts in the US and a relatively
stable European economy, we expect
completed deal flow to increase
through the remainder of the year.
Notable transactions announced in
the first quarter include Keurig Green
Mountain's $23 billion take-private
of Dr Pepper Snapple Group and
Blackstone's $17 billion carveout of
Overview
Completed deals stall, but announced
transactions point to uptick
Deal count continued to slide in 1Q
M&A activity in North America & Europe
3
Source: PitchBook
*As of March 31, 2018
PITCHBOOK 1Q 2018 M&A REPORT
OVERVIEW
Thomson Reuters' financial and risk
business. Both transactions reflect
two prominent themes in today's
M&A landscape the growing influence
of private equity and the interplay
between public and private markets.
The IT and B2B sectors saw their shares
of M&A activity increase in 1Q, accounting
for 19.5% and 38.6% of completed
transactions, respectively. The IT sector
continues to play a more prominent role
for strategic and financial acquirers alike,
commanding a greater share of both deal
flow and capital invested. Fast-changing
technology continues to pose a threat
to existing business models, forcing
incumbents to either ramp up R&D or
to acquire more nimble competitors. In
addition, IT companies are increasingly
being acquired by businesses in non-
tech sectors, accounting for 45.4% of
deal flow. Meanwhile, B2C transactions
accounted for just 15.9% of deal flow in 1Q
2018. Interest in traditional B2C assets has
dwindled as tech-focused firms continue
making inroads into consumer-facing
segments. Further, businesses that were
once thought of as being traditional B2C,
such as retail, are now created as tech-
focused ecommerce firms.
The number of intercontinental M&A
deals has also trended upward in the last
decade, particularly in Europe. In 1Q 2018,
13.6% of European M&A transactions
involved a non-European buyerhaving
increased from last decade's nadir of
9.0% in 2009. By contrast, the proportion
of North American transactions with
an acquirer from another continent has
grown more slowly, from 6.4% in 2009
to 8.2% in 1Q 2018. Intercontinental
activity in Europe is higher due in part
to the prevalence of North American
buyers, particularly US-based PE firms
and Canadian LPs executing direct
investments, with substantial operations
across the Atlantic. On the other hand,
European investors have traditionally
exhibited a propensity to invest close to
home. Nonetheless, both regions have
seen an increase in activity from foreign
buyers, partially driven by the fact that
such acquisitions serve as an efficient
way to expand a company's footprint in
today's global economy.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2014
2015
2016
2017
2018
Materials &
resources
Healthcare
Financial
services
Energy
B2C
B2B
IT
$47.9
$38.5
$0
$10
$20
$30
$40
$50
$60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2014
2015
2016
2017
2018
Materials &
resources
Healthcare
Financial
services
Energy
B2C
B2B
IT
Source: PitchBook
*As of March 31, 2018
Source: PitchBook
Source: PitchBook
Median deal size remains historically high
Median M&A deal size ($M) in North America & Europe
B2C clout continues to shrink
M&A (#) by sector in North America & Europe
B2B commands a growing share of capital
M&A ($) by sector in North America & Europe
PITCHBOOK 1Q 2018 M&A REPORT
4
Source: PitchBook
*As of March 31, 2018
Spotlight: Healthcare
Set for a slower 2018
Following a record-setting year in
2015, healthcare M&A dwindled for
two consecutive years and is on pace
for a slower 2018. 368 deals were
completed, accounting for 9.4% of
M&A deals, pacing behind last year's
tally of 9.7%, and totaling $53.5 billion
in 1Q 2018. Deals have historically been
larger in this space than in the broader
market. The median healthcare
deal size was $54.6 million in 2017,
compared to $38.5 million across all
sectors, though this trend reversed in
the first quarter of this year.
A year ago, healthcare dealmakers
were consumed by the possibility of
changes to, or the elimination of, the
US Affordable Care Acta prospect
that seems less likely for the time
being.
9.7% 9.4%
6%
7%
8%
9%
10%
11%
12%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018*
2,041
368
$0
$100
$200
$300
$400
$500
$600
$700
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
0
500
1,000
1,500
2,000
2,500
3,000
Healthcare deal value ($B)
Healthcare deal count
Source: PitchBook
*As of March 31, 2018
Healthcare has accounted for a higher proportion of M&A
volume in recent years
Healthcare (#) as % of total M&A activity
Healthcare M&A activity
PITCHBOOK 1Q 2018 M&A REPORT
5
Today, dealmakers are less focused
on public policy and more attuned to
the shifting competitive landscape,
including the recently announced
partnership among Amazon, Berkshire
Hathaway and JP Morgan Chase.
According to their recent press
release, the trio will attempt to provide
healthcare benefits to their own
employees through "an independent
healthcare company that is free
from profit-making incentives and
constraints." Though few details are
known about the partnership, it will
certainly influence other firms in the
spacefrom insurers and pharmacy
benefit managers to biotech and
pharmaceutical companiesand could
be a harbinger of more strategic
jockeying in the coming years as firms
look to hedge their bets or forge
partnerships of their own.
Even without large partnerships
threatening to take intermediaries out
of the healthcare supply chain, industry
players have plenty of obstacles to
overcome. Regulatory changes in major
markets remain possible, which could
change anything from drug approval
timelines to reimbursement processes.
In addition, gene therapy, robotics and
machine learning could permanently
$54.6
$37.0
$582.7
$512.8
$0
$100
$200
$300
$400
$500
$600
$700
$800
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Median
Average
Source: PitchBook
*As of March 31, 2018
Healthcare transaction sizes have grown in
tandem with overall deal metrics
Median & average healthcare M&A deal size ($M)
Acquired company
Date
Deal size ($M)
Industry
American Medical Response
March 14, 2018
$2,400
Other healthcare services
U.S. HealthWorks
February 1, 2018
$753
Clinics/outpatient services
Oklahoma University Medical Center
February 1, 2018
$750
Hospitals/Inpatient services
RxCrossroads
January 3, 2018
$735
Other healthcare services
The Medicines Company Infectious
Disease Care Group
January 8, 2018
$270
Drug discovery
Top 5 healthcare deals of 2018
Source: PitchBook
*As of March 31, 2018
challenge the competitive landscape.
Another factor that could upend the
healthcare supply chain is the strong
demand shown by financial sponsors.
Healthcare companiesparticularly
fragmented retail healthcare, such as
dental offices and urgent-care clinics
are the most common add-on targets
for PE firms.

SPOTLIGHT: HEALTHCARE
PITCHBOOK 1Q 2018 M&A REPORT
6
Source: PitchBook
Source: PitchBook
Deals by Region & Size
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q
2013
2014
2015
2016
2017 2018
$5B+
$1B-$5B
$500M-$1B
$250M-
$500M
$100M-
$250M
Under
$100M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q
2013
2014
2015
2016
2017 2018
$5B+
$1B-$5B
$500M-$1B
$250M-
$500M
$100M-
$250M
Under
$100M
The trend toward larger deals continues
M&A (#) by size
The lower & middle ranges of the market see
increased portion of deal value
M&A ($) by size
$1,785$1,136$692$1,034$1,139$1,299$1,271$1,823$2,130$2,156$1,919$32310,134
8,763
6,903
8,719
10,006
11,023
10,553
13,193
14,198
12,705
11,688
2,402
Deal value ($B)
Deal count
$1,218$806$409$648$887$859$960$1,165$1,315$1,280$1,162$2038,416
7,323
5,773
7,855
9,960
9,483
9,717
10,682
12,209
11,200
9,431
1,494
Deal value ($B)
Deal count
Off to a slower pace than in past years
M&A activity in North America
European volume at a slow start to 2018
M&A activity in Europe
Source: PitchBook
*As of March 31, 2018
Source: PitchBook
*As of March 31, 2018
PITCHBOOK 1Q 2018 M&A REPORT
7
Spotlight: Divestitures
Uptick in announced deals signals cyclicality
$512$334$234$459$483$483$562$851$902$755$672$923,161 2,932 3,094
3,844
4,757 4,695 4,651
5,501
6,154
5,169
3,829
618
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal value ($B)
# of deals closed
Even after the recent decline, other factors indicate
divestitures are primed to accelerate
M&A divestitures
Source: PitchBook
*As of March 31, 2018
M&A activity has historically exhibited
a high degree of cyclicality. With
dealmaking steadily increasing over
the last decade and hovering near all-
time highs, speculation has intensified
that we're nearing the end of the
cycle despite the flurry of announced
deals seen early in 2018. Several signs
suggest that the cycle may be ready
to turn, including elevated pricing and
relatively high levels of debt usage.
Another key indicator is an uptick
in the number of carveouts and
divestitures, as many companies are
looking to slim down after the recent
buying binge. While some companies
are using these deals to refocus on
their core business, other divestitures
are being pursued in an effort to
placate regulatory bodies, which have
been exhibiting more scrutiny of many
large-scale deals.
Carved-out business
Announced date
Deal size ($M)
Industry
Innogy
March 11, 2018
$53,006
Energy production
Thomson Reuters (Financial and Risk
business)
January 30, 2018
$17,000
Financial software
AccorInvest
February 27, 2018
$5,438
Hotels & resorts
Federal-Mogul Holdings
April 10, 2018
$5,400
Automotive
Westinghouse Electric Company
January 4, 2018
$4,800
Alternative energy equipment
Top 5 announced carveouts of 2018
Source: PitchBook
*As of March 31, 2018
PITCHBOOK 1Q 2018 M&A REPORT
8
$308.6
$373.4
$0
$50
$100
$150
$200
$250
$300
$350
$400
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018*
This development has yet to
materialize in our completed
transaction data, with just 618
completed deals and $91.6 billion
invested in 1Q; however, we recently
have seen robust activity in announced
deals of this nature, with 463
transactions totaling $149.0 billion that
have yet to close. We expect this trend
to accelerate in the coming quarters;
according to a recent EY report, 87%
of companies plan to initiate their
next divestment within the next two
years, compared to just 43% in 2017.
Since many of these assets will be sold
following failed integrations or due
to regulatory pressure, we anticipate
that potential acquirers may be able to
find discounts relative to the elevated
prices being paid for other M&A
transactions.
$308.6M
average size of divestitures
closed in 1Q 2018 is below that of
last year's tally, but persists at a
historically high level
Divestitures have persisted at high levels in recent years
Average divestiture size ($M)
Source: PitchBook
*As of March 31, 2018
But that does not mean that divestiture
deals will necessarily be small. Indeed,
the sizes of recent carveouts and
divestitures have been particularly
noteworthy; the median divestiture
completed in 1Q 2018 was $308.6
million, compared to a median of
$257.4 million over the last decade.
The median grows to $583.0 million for
deals that are announced but not yet
closed, including Unilever's $13.9 billion
divestiture of its spreads business and
Blackstone's announced $17.0 billion
buyout of Thomson Reuters' financial
and risk business.
SPOTLIGHT: DIVESTITURES
PITCHBOOK 1Q 2018 M&A REPORT
9
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