According to Mergermarket, 2017 is a year in the global M & A industry, but it is not a good year as the value of global M & A business dropped just below its 2016 performance and its value dropped 3.2%.
On the other hand, in 2018, a series of major mergers and acquisitions announcements began. According to Thomson Reuters data, to date, 11 transactions have hit more than 5 billion U.S. dollars, reaching 94 billion U.S. dollars, setting a record of more than 5 billion U.S. dollars in transactions in January.
In addition, Bloomberg reported that 2018 is the best start for the overall global M & A activity, with a total of 224 billion U.S. dollars since January 2000.
So in the first few weeks of the new year, what led to all the ups and downs in mergers and acquisitions? From my point of view, there are a variety of reasons, including but not limited to the following:
Business confidence and optimism
Too much cash on the corporate balance sheet
The relative stability of the U.S. and the global economy
S. Corporate tax dropped from 35% to 21%
The recently enacted US tax plan’s repatriation clause
As for the last point above, the terms of the new tax law’s repatriation may result in more cash being returned to the balance sheets of some U.S. multinationals. To this end, Apple recently announced plans to return the vast majority of 252 billion U.S. dollars in cash held overseas.
In general, one potential use of any excess cash recovered by US companies would be mergers and acquisitions, with potential M & A targets likely to be in the area of ??technology and biotechnology as technology and healthcare account for 85% of the total assets of overseas S & P 500 targets Li Stewart article TheStreet.com has the right, 2 0 company Goldman Sachs will be Trump’s big tax planning big win.
Regarding biotechnology, I believe some large pharmaceutical companies that benefit from repatriation may consider acquiring attractive biotech companies for the following reasons:
The “patent cliff” owned by large pharmaceutical companies with drugs will continue to be patentable and vulnerable to generic drug competition
In many of these pipelines there is a lack of impact on larger pharmaceutical companies to replace loss of compression through patent cliffs or drug prices
The process of approving new drugs is lengthy and expensive compared to buying drugs that have been approved or approached by the final Federal Drug Administration approval
Technically, I believe some large IT companies that have excess cash on their balance sheets may start thinking of acquiring attractive technology companies that are associated with more revolutionary technologies in areas such as FinTech For the following reasons:
Some of the technological innovations that change the rules of the game primarily affect various aspects of the financial industry such as AI, cybersecurity, and blockchain
Recognition of the widespread use of cryptocurrencies (at least as investment options today) and the potential of blockchain technologies on which cryptocurrencies (such as bitcoin) are based
The Needs and Aspirations of the U.S. Economy in Linearity and Some Demographics of American Consumers (Millennials, for example)
It is also worth noting that any acquisition by small companies in 2018 could help boost the returns of the small and mid-cap asset classes during the year. Time tells us whether M & A activity will continue its ongoing boom, but in the end we will see some year-end comments referring to the Year of M & A.