Executive Summary/Highlights: 

• Global M&A activity had a slow start and a strong finish in 2016, totaling nearly US$3.7 trillion, posting the second strongest year since the financial crisis (lower only than 2015).

• 2016 also accounted for the second highest cross-border deal volume (US$1.4 trillion) since the financial crisis, with cross-border deals announced in 2016 accounting for six out of the 10 largest deals of the year.

• 2016 had its share of “megadeals,” albeit trailing 2015 levels, with 45 deals over $10 billion (compared to 69 in 2015) and four deals over $50 billion (compared to 10 in 2015).

• Drivers of the robust activity – including large cross-border transactions – included consolidation in several sectors, increasingly scarce opportunities for organic growth, high acquirer stock prices, and the continued availability of low-cost acquisition financing. The slower pace relative to 2015 may have been attributable to political uncertainty arising from the U.S. elections, the near-term possibility of U.S. interest rate increases from their prolonged and historical lows, uncertainty about the economic impact of Brexit on the United Kingdom and the European Union, and the record volume of deals that were withdrawn or terminated due to regulatory issues.

• The Technology sector’s share of deal volume has surged since 2012, approaching levels (nearly 15%) last seen in 2000. Technology drove a much larger share of cross-border deal-making in 2016 relative to prior years, jumping from approximately 5% to over 10%, and including such notable deals as SoftBank/ARM.

• Q4 2016 was the second most active quarter since the financial crisis, with more than US$1.2 trillion in deals announced, including six of the ten largest deals of 2016, and two of the three largest deals of 2016. Interestingly and unpredictably, Q4 represented a nearly 50% surge over Q3 deal volume.  Through the first three quarters of 2016, annualized M&A volume was trending lower than each of 2008 and 2014, before overtaking them in Q4 and transforming 2016 from a relatively moderate post-crisis year to the second most active.

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