The month of August recorded the lowest deal values for both mergers and acquisitions (M&A) and private equity (PE) deals in 2018 on account of the absence of big ticket transactions.
The month recorded transactions worth $2 billion across 100 M&A and PE deals, with only six deals valued over $100 million each, compared to two billion-dollar deals and six deals valued at and over $100 million each in August 2017, according to advisory firm Grant Thornton India.
The monthly M&A activity was the lowest in 2018, with 33 deals aggregating nearly $600 million during the month. Given the drop in the mega deals, the average deal size decreased to $19 million, from $178 million recorded in the previous month. The month recorded only two deals valued over $50 million each compared to five such deals recorded in August 2017.
Compared to July 2018, the month witnessed a significant drop in the deal trend both in terms of deal values by 93% and deal volumes by 33%. This was primarily on account of absence of billion-dollar deals that were recorded in July in addition to seven big ticket transaction valued over $100 million compared to only two such deals executed in August 2018.
“M&A transactions reported about 30% decline in volume and value terms in August 2018 as compared to August 2017. Lack of conclusion on large ticket IBC transactions and other domestic or cross border transactions impacted the deal report card in August 2018,” said Pankaj Chopda, director, Grant Thornton India, in a report.
However, the M&A environment remains healthy in certain sectors despite the overall drop. Pharma, healthcare and biotech and media and entertainment sectors witnessed the maximum activity. Driven by Constellation Alpha Capital Corp’s acquisition of Medall Healthcare Pvt Ltd for $212 million, the healthcare sector led the deal activity with 37% of the total M&A deal values followed by media & entertainment (22%) and startup (19%).
Meanwhile, the month was driven by activity in the startup sector, which accounted for with 37% of deal volumes.
“Considering the proximity that BFSI, consumer & retail, manufacturing, IT&ITES and pharma, healthcare and biotech sectors have to consumer consumption trends and lifestyle, these sectors are expected to witness M&A deal activity,” said Chopda, adding that the lack of relief to power companies facing insolvency suits under IBC law will also drive M&A transactions in the sector.