Executive Summary/Highlights:

• Global M&A volume in Q2 grew 25% over Q1 and exceeded US$900 billion, resulting in the second busiest first half of the year since 2010, albeit considerably slower than the recent highs of 2015.

• Although Europe was well represented in the largest deals, as the only non-U.S. target region represented in the top 10 deals of Q2, Europe accounted for one-sixth of Q2 deal activity, down substantially from the high level it experienced in Q1. China was also down to approximately the same level, and together the two regions accounted for about one-third of M&A volume in Q2. The United States’ share of global M&A surged back to 51% in Q2, up from 35% in Q1.

• Cross-border M&A activity was 31% of global deal volume in Q2, down from 43% in Q1 and slightly below the ~35% level of recent years. Three of the 10 largest deals in Q2 were cross-border transactions, all involving European targets.

• The Materials sector accounted for the most cross-border M&A in Q2, exceeding US$80 billion in volume and more than 28% of all cross-border activity for the quarter, followed by the Healthcare and High Technology sectors, each with approximately US$30 billion in volume.

• Distressed deal activity in 2016 is down significantly from 2015, on pace to be less than US$9 billion, compared to over US$40 billion last year. If distressed deal activity continues at its current pace, it would represent the smallest year for such deals since 1998 and the second smallest since at least 1990.

• Despite continued concerns relating to further increases in interest rates, political uncertainty in the United States and Europe, and reduced appetite for risk with respect to tax and regulatory developments, global deal volume did not slow in Q2. That said, the implications of Brexit are still unclear and that uncertainty could temper global M&A activity. Competing factors driving M&A volume, and particularly cross-border activity, include the continued availability of relatively low-cost acquisition financing, large cash stockpiles and attractive acquisition currency in the form of buyer stock, the drive of many corporations to realize synergies and fuel growth through acquisitions, and the continuing desire to expand geographic reach beyond current markets.

Click here to see the Review