M&A
Report
2Q 2018
Contents
Key takeaways
2
Overview
3-6
Deals by size & sector
7
Spotlight: Financial services
8-9
Spotlight: European M&A
10-11
Credits & Contact
PitchBook Data, Inc.
John Gabbert Founder, CEO
Adley Bowden Vice President,
Market Development & Analysis
Content
Wylie Fernyhough Analyst, PE
Bryan Hanson Senior Data Analyst
Darren Klees Data Analyst
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methodologies.
32
mega-deals completed
in 1H 2018
3,848
deals completed in
Europe in 1H 2018
$140.3B
in financial services
deals completed in 1H
2018
Key takeaways from the analysts
2Q 2018 saw 5,472 deals completed
totaling $939.1 billion across North
America and Europe—a 3% and 33%
increase, respectively, over the 5,322
deals worth $704.8 billion reported
in 1Q 2018. The 32 mega-deals ($5
billion+) completed in 1H lifted total
deal value while the number of
transactions remained level.
M&A activity has been steady
across Europe in 1H 2018, with 3,848
transactions completed totaling $512.6
billion. North American activity was
stable as well with 5,881 completed
deals worth $955.6 billion. The number
of announced mega-deals across both
regions ought to ensure M&A activity
continues to boom.

The financial services sector
experienced an uptick in activity while
value fell as fewer large deals closed.
In 1H, the sector saw 910 deals with
a total value of $140.3 billion close,
compared to the 973 transactions
worth $215.7 billion in 1H 2017. The
industry is undergoing a substantial
shift that has led M&A to be viewed as
a tool to position firms for the future.
Note: This report was updated on September 21, 2018 to account for a previous
error in underlying methodology.
PITCHBOOK 2Q 2018 M&A REPORT
2
Overview
Source: PitchBook
*As of June 30, 2018
M&A investment experienced an
uptick in the second quarter due to
several completed mega-deals. 5,472
deals were completed totaling $939.1
billion across North America and
Europe—a 3% and 33% increase over
1Q, respectively. Four deals above $10
billion closed in the quarter—including
Bayer’s $63 billion acquisition of
Monsanto and Vodafone’s $21.8 billion
(¤18.4 billion) acquisition of UPC
Czech—leading to the sizable rise in
deal value on roughly flat transaction
volume. Deals of this nature are likely
to persist in the coming quarters, with a
number of gargantuan transactions also
being announced, including the $67
billion acquisition of Express Scripts
by Cigna as well as The Walt Disney
Company’s $71.3 billion bid for 21st
Century Fox assets. The M&A market
is inexorably linked with business
sentiment, corporate fundamentals and
macroeconomic forces that can impact
factors like access to financing. With
all these indicators continuing to trend
Deal value ($B)
Es�mated deal value ($B)
# of deals closed
Es�mated # of deals closed
$1,985$1,093$1,687$2,031$2,153$2,246$2,976$3,412$3,426$3,218$1,64416,302
12,840
16,776
20,148 20,72220,523
24,192
26,727 24,456
22,564
10,794
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Transaction value on pace to match recent figures
North American and European M&A activity
3
PITCHBOOK 2Q 2018 M&A REPORT
Source: PitchBook
*As of June 30, 2018
positively, the global M&A boom shows
no signs of stopping. Altogether, 2018
is unlikely to eclipse the record-setting
numbers achieved in 2015, but it is on
pace for another $3 trillion+ year.
The subtle shifts and divergences in
interest rates may also be influencing
the dealmaking atmosphere. Today
markets are awash in cash, providing
cheap and easy access to acquisition
financing; however, interest rates are
rising in North America while Europe
looks to hold rates at historically
low levels for at least another year.
Looking forward to the medium-to-
long term, interest rates across the
globe will almost certainly be higher,
meaning companies—especially ones
hoping to finance an acquisition with
tens of billions of dollars in debt—are
incentivized to act now on planned
deals to save on the financing costs.
In this increasingly competitive global
environment, CEOs are becoming
more active, disposing of non-
core assets and bolstering current
operations through M&A. According
to a recent Ernst & Young report,
“Nearly a third of executives have
increased the frequency of portfolio
reviews in the past three years.”1 Even
though the rate of closed deals has
slowed, the outlook remains bright for
European M&A in the coming quarters.
Similarly, the positive outlook for
North American M&A persists with US
GDP growth in 1Q coming in above
4%, adding to business executives’
sanguine view of the economic future.
Since falling to their respective nadirs
in 2009, deal sizes have rebounded to
unprecedented levels. The growth has
been most pronounced for platform
buyouts, where the median deal size
has grown at a compound annual
growth rate (CAGR) of 18.4%, outpacing
both add-on buyouts (15.3%) and
corporate acquisitions (11.6%).
OVERVIEW
Rates finally on the rise in US; Europe to hold steady
ECB and Fed funds rates (%)
Frequency and price diverge as average carveout size
comes off decade high
Carveout frequency and average size
2,9863,1163,8764,7974,7554,7055,5566,1785,2564,1091,599$213.6
$127.2
$254.1
$180.3
$194.4
$260.7
$337.7
$299.0
$300.1
$400.5
$316.1
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
# of deals closed
Average carveout ($M)
0%
1%
2%
3%
4%
5%
6%
7%
20002001201020112012201320142015201620172018*Key ECB rate
Fed funds rate
20022003200420052006200720082009Source: CentralBankRates.com
*As of June 30, 2018
1: “Global Capital Confidence Barometer, 18th edition,” Ernst & Young, April 2018
PITCHBOOK 2Q 2018 M&A REPORT
4
Institutional investors continue
increasing allocation targets to PE
as the industry continues to mature
and escalate its prominence; the PE
industry manages $1.9 trillion in North
America and Europe (as of December
31, 2017). PE firms have been raising
increasingly large funds—such as the
$20 billion buyout fund Blackstone
announced in 2Q—and are buying
larger companies to properly allocate
that capital. This trend should continue
to push median buyout sizes higher.
Corporations, flush with cash from
a near decade-long recovery and
a penchant for acquisitions, should
pursue larger targets as well.
While every deal that closed above $10
billion in 2Q involved a publicly traded
acquirer, corporates are prolific buyers
on the low-end as well. Small businesses
account for an outsized portion of
acquirers compared to the more
substantially sized PE-backed companies,
causing corporate acquisition deal size
medians to come in well under PE-
backed platform buyout medians.
Deal sizes in North America and
Europe have steadily marched
higher since 2009, when the median
transaction value was $15.2 million
in North America and $14.0 million
in Europe. Since that time, median
North American deals have expanded
at a CAGR of 15.6% to $52.1 million,
whereas European medians have
experienced a CAGR of 11.8% to reach
the current $36.0 million median
value. M&A activity in North America,
especially add-on buyouts, is gaining
popularity as a way to augment top-
line expansion in this lower-growth
environment. Over the past five years,
S&P 500 companies have advanced
their top-line at just 3.6% on average.
And, with access to financing so
cheap—although rates are beginning
to creep up—buying growth can
appear more attractive than doing it
organically through R&D.
OVERVIEW
Deal sizes remain elevated
Median deal size ($M) by type
Median North American and European deal sizes grow to
decade high
Median deal size ($M) by region
Corporate acquisi�on
Add-on buyout
Pla�orm buyout
$27.9
$31.0
$55.9 $50.0
$130.2
$150.0
$0
$20
$40
$60
$80
$100
$120
$140
$160
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Source: PitchBook
*As of June 30, 2018
$50.0
$52.1
$33.0
$36.0
$0
$10
$20
$30
$40
$50
$60
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018*
North America
Europe
Source: PitchBook
*As of June 30, 2018
PITCHBOOK 2Q 2018 M&A REPORT
5
Across the board, M&A deal count
has been plateauing since its climax in
2015 as corporations remain confident
about the global economy—post-
global financial crisis—to put significant
capital to work. At the same time,
many PE-backed companies acquired
pre-crisis had weathered the storm and
were ready to be sold. By virtually any
historical measure, our current M&A
environment is healthy; while the trend
in deal count is slightly down, total deal
value is faring better because average
deal size is larger.
This is in a similar vein to what we
are seeing across public markets.
The number of public companies
has continued to dwindle since the
tech-bubble peak in 2000, when
companies were listing daily. In today’s
market, large, cash-rich incumbents
are gaining scale and now represent
unprecedented levels of value. The rate
of new business creation has slowed
at a time when the rate of business
closures is up. This trend will pressure
deal count, as there are fewer potential
target companies in the M&A market.
Over the longer term, certain sectors,
especially healthcare and IT, have
grown deal count at an above-average
rate. These sectors have also grown at
faster rates than the global economy,
but most other sectors are falling
behind in terms of M&A activity.
Overall, a few sectors may grow deal
count, but the longer-term structural
changes happening in North America
and Europe ensure deal count will
remain flat-to-down going forward.
OVERVIEW
Deal count slowly trends lower
M&A deals (#)
IT and healthcare increase M&A activity at the fastest rates
CAGR in deals (#) by sector (2009-2017)
6,9896,4266,6566,6566,9946,1715,8855,4066,2275,4875,3855,4655,3225,4720
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2015
2016
2017
2018
Deal count
Es�mated # of deals closed
Source: PitchBook
*As of June 30, 2018
7.6%
6.3%
2.5%
7.4%
9.3%
8.3%
6.5%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
B2B
B2C
Energy
Financial
services
Healthcare
IT
Materials &
resources
Source: PitchBook
PITCHBOOK 2Q 2018 M&A REPORT
6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017 2018*
Materials &
resources
IT
Healthcare
Financial
services
Energy
B2C
B2B
Deals by size & sector
Core middle market ($100M-$500M) and
mega-deals increase portion of deal value
North American and European M&A ($) by size
As overall activity falls, larger deals
continue to gain share
North American and European M&A (#) by size
Energy sees lowest proportion of deal
value in a decade
North American M&A ($) by sector
IT sees banner year as B2C continues to
slump
European M&A ($) by sector
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$5B+
$1B-$5B
$500M-
$1B
$250M-
$500M
$100M-
$250M
Under
$100M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$5B+
$1B-$5B
$500M-
$1B
$250M-
$500M
$100M-
$250M
Under
$100M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017 2018*
Materials &
resources
IT
Healthcare
Financial
services
Energy
B2C
B2B
Source: PitchBook
*As of June 30, 2018
Source: PitchBook
*As of June 30, 2018
Source: PitchBook
*As of June 30, 2018
Source: PitchBook
*As of June 30, 2018
PITCHBOOK 2Q 2018 M&A REPORT
7
Through 1H 2018, 910 deals were
completed in the financial services
sector with a total value of $140.3
billion. Although dealmaking is slightly
off pace compared to last year, 1H
2017’s total deal value was $215.7
billion—a full 53.7% higher on the back
of eight mega-deals closing. Lately,
the sector has been devoid of mega-
deals—without any closing in the past
three quarters, compared to 12 in the
preceding three quarters. Prior to 4Q
2017, the last quarter to pass without
a financial services mega-deal closing
was 3Q 2013. Though no mega-
deals closed in the sector in 1H, the
sector saw a few sizable transactions
close, such as Pure Industrial’s $3.0
billion (C$3.8 billion) acquisition by
Blackstone and Ivanhoé Cambridge.
Changes in the sector are afoot;
from banks to lenders and asset
managers, the old guard of companies
is being upended by changing
consumer preferences, a new breed of
competitors and increasingly onerous
regulations. Basel III and Dodd-Frank—
responses to the excessive risk banks
took that exacerbated the global
financial crisis—have hampered the
lending abilities of banks across North
America and Europe. In North America,
the lending restrictions included an
implicit limitation on bank lending on
deals with debt/EBITDA ratios over 6x.
The regulators later walked this figure
back, allowing banks to lend on higher-
levered deals; by this point, however,
the lending market had erupted with
alternative lenders, such as direct
Spotlight: Financial
services
Activity slows through the first half of the year
Financial services M&A activity
Financial services shrinking proportion of M&A value
Financial services as % of total M&A activity
Deal value ($B)
# of deals closed
$354.0$219.4$160.1$217.3$212.8$303.9$374.0$481.7$426.6$416.2$140.31,366
1,115
1,414
1,661
1,657
1,706
2,016
2,283
2,112
1,975
910
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Source: PitchBook
*As of June 30, 2018
13.3%
10.4%
9.0%
9.4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018*
% of value
% of count
Source: PitchBook
*As of June 30, 2018
PITCHBOOK 2Q 2018 M&A REPORT
8
SPOTLIGHT: FINANCIAL SERVICES
Source: PitchBook
*As of June 30, 2018
lending funds, that were eager to
finance deals levered well beyond 6x
and expanded their lending capacity
accordingly. Alternative lenders like
Ares, FS Investment Corporation and
others have kept capital flowing in
North America and Europe, allowing
the M&A market to continue booming.
All financial services subsectors are
in flux; however, the rate of change
may be the most pronounced in
asset management. Over the last 15
years, two shifts have permanently
altered the investment landscape—
the move from active to passive
management and the maturation of
the private markets. To illustrate the
first point, Morningstar reports that
in 2017, passive US mutual funds
and ETFs saw net inflows of $692
billion while active funds suffered
net outflows of $7 billion.2 Indeed,
large active managers have had a
more difficult time increasing assets
under management than Vanguard
or BlackRock, the two largest passive
managers. Asset managers on both
sides are not standing still. Invesco,
for example, in 2Q 2018, completed a
$1.2 billion acquisition of Guggenheim
Investment’s ETF business in an effort
to strengthen its passive investment
options. Passive managers are using
M&A to add to their strengths as well,
with WisdomTree spending $1.4 billion
on ETF Securities along with their
exchange-traded commodity, currency
and short-and-leveraged business in
April 2018.
Private markets—from PE to VC—are
increasingly viewed as an integral
piece of a well-diversified portfolio,
which has led institutional investors
to increase their target allocations.
The growing importance of private
markets is evidenced by ODDO BHF’s
$2.1 billion (¤1.8 billion) acquisition of
ACG Capital, a PE firm, which closed in
Top 5 financial services deals closed in 1H 2018
Financial services transaction size falls below the overall
M&A average
Average transaction size ($M)
2Q. CVC and other PE firms have been
increasing assets and the number of
companies owned while the number of
publicly listed companies diminishes. The
amount of capital in the industry, as well
as the number of PE-backed companies,
has more than doubled since 2000.
During this tectonic shift, many of the
traditional asset managers have needed
to bulk up by merging or acquiring
similar and/or complementary businesses
to avoid fee compression from slowly
destroying what used to be a higher-
margin business.
Acquired company
Date
Deal size ($B)
Subsector
Pro bAV Pensionskasse
April 4, 2018
$3.7
Pension plan services
ETF Securities (Canvas
Platform)
March 16, 2018
$3.3
Capital markets/
institutions
Liberty Life Assurance
Company of Boston
May 1, 2018
$3.3
Life and health
insurance
Canadian Real Estate
Investment Trust
May 4, 2018
$3.0
Real estate investment
trusts (REITs)
ACG Capital
April 6, 2018
$2.2
Private equity
Source: PitchBook
*As of June 30, 2018
$353.8
$426.3
$473.7
$325.2
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2010
2011
2012
2013
2014
2015
2016
2017
2018*
All industries
Financial services
2: “Morningstar Direct Asset Flows Commentary: United States,” Alina Lamy, January 18, 2018
PITCHBOOK 2Q 2018 M&A REPORT
9
Aggregate transaction volume and value
is off to a slow pace in 2018 relative to
recent years. 3,848 transactions were
completed totaling $512.6 billion, a
clear abatement from the 5,412 deals
valued at $633.5 billion achieved in 1H
2017. While European M&A activity is
putting up lofty numbers, 2018 marks
the largest decline in M&A share since
2014. North America has been riding
an M&A boom of epic proportion,
consistently outpacing the activity in
European M&A. Even though European
M&A has been shrinking in proportion
to North American M&A, many of the
larger acquisitions of North American
companies are by Europe-based
companies. Interestingly, two of the four
largest acquisitions of North American
companies to close in 1H 2018 had
European buyers, including Bayer’s
$63 billion acquisition of Monsanto
and Sanofi’s $11.6 billion acquisition of
Bioverativ Therapeutics. European M&A
activity continues to be robust, with
European firms being active on both
sides of the equation. One reason for
the decline is currency-related; our M&A
figures are priced in USD, and since the
dollar has been strengthening recently,
the USD-denominated M&A value in
Europe has declined in comparison.
The pipeline of announced mega-deals
has swollen as the largest companies
have become especially acquisitive—a
divergence from count and value of
closed deals. The proliferation spans
industries—from infrastructure, such as
Atlantia’s $21.3 billion (¤18.2 billion) bid
for Spanish toll-road owner Abertis, to
traditional retail, with Sainsbury agreeing
to buy Asda for $10 billion (£7.3 billion).
Spotlight: European
M&A
Weaker 1H, but robust back half is expected
European M&A activity
European M&A value cedes ground to North America
European & North American M&A as a proportion of total M&A ($)
This has led to many pundits proclaiming
“the return on the mega-deal,” with the
largest public companies around the
world flexing their financial muscles
and buying up prominent European
companies.3
$822.2$400.4$650.0$887.0$859.9$970.2$1,154.0$1,283.6$1,252.8$1,197.1$512.67,413
5,865
7,933
10,031
9,564 9,817
10,811
12,350 11,457
10,163
3,848
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal value ($B)
# of deals closed
30%
35%
40%
45%
50%
55%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
North
America
Europe
Source: PitchBook
*As of June 30, 2018
Source: PitchBook
*As of June 30, 2018
3: “Return of mega-deals helps European M&A double,” Reuters, Ben Martin, June 28, 2018
PITCHBOOK 2Q 2018 M&A REPORT
10
SPOTLIGHT: EUROPEAN M&A
On the dealmaking front, the forecasted
negative effects of Brexit are not
appearing in corporate acquisition data.
In fact, we have seen an acceleration of
mega-deals in recent quarters. The current
Fox and Comcast bidding war for Sky has
recently hit the $34 billion (£26 billion)
mark and Takeda’s soon-to-close bid for
Shire is worth $62 billion (£45.3 billion).
Companies around the world understand
that the UK offers deep capital markets
and talent pool, and those competitive
advantages will not disappear overnight.
This strategic M&A activity lies in contrast
to our findings in PE data—lower deal
count and fundraising figures and higher
exit activity—which seemed to suggest
that dealmakers are becoming more
cautious about doing business in the UK
with Brexit approaching. It will be worth
watching both sets of data to see whether
this divergence continues.
To be sure, some areas are already feeling
the effect. The negative currency impact
and surrounding stigma from Brexit
suppressing UK asset values caused
many investors to now see them as
undervalued. Of the 14 mega-deals closed
in 2018, five were UK-based companies,
an increase over 2017 where six of the
23 closed mega-deals were UK-based
companies. Those two aforementioned
mega-deals are in sectors—media and
pharmaceuticals—that ought to be able
to thrive no matter their headquarters’
location, because multinational
conglomerates in these sectors will need
to navigate a variety of jurisdictions
regardless of the parent’s HQ.
Brexit’s negative impact on the GBP may
be incentivizing global companies to
bid on these “crown-jewel” type assets
when there may be only a few such
opportunities globally, due to their high
quality and value but lower price in local
currency. While this data is on the shorter-
term and variability is prone to happen,
this seems like a solid indication that
post-Brexit UK may not be as bad as the
original headlines led many to believe.
European M&A trending downward as USD rises
European M&A deal count and EUR/USD
Proportion of $500M+ deals reaches a decade high
European M&A ($) by size
Top five European deals closed in 1H 2018
Acquired company
Date
Deal size ($B)
Industry
UPC Czech
May 9, 2018
$21.8
IT
WorldPay
January 16,2018
$12.9
IT
GKN Group
May 21, 2018
$11.3
B2B
Zodiac Aerospace
February 13, 2018
$8.2
B2B
Bayer seed and herbicide
business
March 31, 2018
$7.3
Materials & resources
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q
2008
2009
2010
2011
2012
2013
2014
2015
2016
20172018
European deal count
EUR/USD
Source: PitchBook
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017 2018*
$5B+
$1B-$5B
$500M-$1B
$250M-
$500M
$100M-
$250M
Under
$100M
Source: PitchBook
*As of June 30, 2018
Source: PitchBook
*As of June 30, 2018
PITCHBOOK 2Q 2018 M&A REPORT
11
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