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Industrial M&A Falls in 2019

Bill Koenig
By Bill Koenig Senior Editor, SME Media

Industrial merger and acquisition activity fell in 2019 because of slowing economies and trade uncertainty, consulting firm PwC said in a report.

The number of transactions tracked by PwC declined to 2,374 last year, down from 2,591 deals in 2018.

The value of M&A deals slipped to $84.1 billion in 2019, down from $104.1 billion the year before. Large transactions PwC calls “megadeals” accounted for $20.1 billion, or 24 percent, of total deal value in 2019.

Megadeals “remained prevalent in a slightly declining deals market, a trend we believe will continue into 2020,” Paul Elie, PwC’s industrial manufacturing deals leader, said in a statement.

Last year was marked by trade tensions, including a trade war between the U.S. and China. The two countries have signed a “phase one” trade agreement that has put the conflict on pause. Also, economic growth has eased in various countries, including the U.S.

In 2020, concerns about slowing economic expansion “remain on the minds of deal makers,” PwC said in the report.

“Some deal makers will continue to practice caution while others will identify opportunities,” the consulting firm added.

There will be factors that will help deals being struck, according to the report.

PwC forecast that any economic downturn will be mild compared with the recession brought on by the financial crisis of 2007 and 2008. The consulting firm said “the fundamentals of global economies, particularly China and the United States, are much stronger, a sort of soft landing growth recession.”

Also, PwC said, interest rates remain low and “will allow companies to access a favorable lending environment to finance deals.”

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