Mergers and Acquisitions Report Q1 2018 by PitchBook

After a strong 2017, M&A activity got off to a sluggish start in the first quarter of this year. Across North America and Europe, 4,867 deals were completed in 1Q 2018, totaling $616.7 billion in value—18% and 25% YoY decreases, respectively. Though completed deal count slid substantially, an additional 973 deals totaling an estimated $451.3 billion have been announced but have yet to close. On that account, combined with the knock-on effects of corporate tax cuts in the US and a relatively stable European economy, we expect completed deal flow to increase through the remainder of the year.
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About Techcelerate Ventures

Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.
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<p>M&A
Report
1Q 2018
Contents
Key Takeaways
2
Overview
3
Spotlight: Healthcare
5
Deals by Region & Size
7
Spotlight: Divestitures
8
Credits & Contact
PitchBook Data, Inc.
John Gabbert Founder, CEO
Adley Bowden Vice President, 
Market Development & Analysis
Content
Dylan Cox Senior Analyst, PE  
Darren Klees Data Analyst 
Contact PitchBook
pitchbook.com
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reports@pitchbook.com 
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editorial@pitchbook.com 
Sales  
sales@pitchbook.com
Cover design by Caroline Suttie 
 
Click here for PitchBook's report 
methodologies.
$616.7B 
total value across  
North America and 
Europe in 1Q 
Key takeaways from the analysts
 After a strong 2017, M&A activity 
got off to a sluggish start in the first 
quarter of this year. Across North 
America and Europe, 4,867 deals were 
completed in 1Q 2018, totaling $616.7 
billion in value18% and 25% year-
over-year decreases, respectively.
 Though the pace of completed 
corporate divestitures was rather 
slow in 1Q 2018, 463 divestitures 
totaling $149.0 billion have been 
announced but have yet to close. We 
expect divestiture activity to increase 
during the remainder of the year, as 
companies look to slim down after the 
recent buying binge.
 B2C transactions accounted for just 
15.9% of deal flow in 1Q 2018. Interest 
in traditional B2C assets has dwindled 
as tech-focused firms continue to 
make their mark on consumer-facing 
businesses. Further, businesses that 
were once thought of as traditional 
B2C, such as retail, are now created as 
tech-focused ecommerce firms. 
$149.0B 
total value of 
announced divestitures 
15.9% 
of total deal flow in 
B2C, a slow start 
relative to prior full-
year tallies 
PITCHBOOK 1Q 2018 M&A REPORT
2 
4,867
0
5,000
10,000
15,000
20,000
25,000
30,000
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal value ($B)
Es mated deal value ($B)
Deal count
Es mated # of deals closed
21, 119
After a strong 2017, M&A activity 
got off to a sluggish start in the first 
quarter of this year. Across North 
America and Europe, 4,867 deals 
were completed in 1Q 2018, totaling 
$616.7 billion in value18% and 
25% YoY decreases, respectively. 
Though completed deal count slid 
substantially, an additional 973 deals 
totaling an estimated $451.3 billion 
have been announced but have yet 
to close. On that account, combined 
with the knock-on effects of corporate 
tax cuts in the US and a relatively 
stable European economy, we expect 
completed deal flow to increase 
through the remainder of the year. 
Notable transactions announced in 
the first quarter include Keurig Green 
Mountain's $23 billion take-private 
of Dr Pepper Snapple Group and 
Blackstone's $17 billion carveout of 
Overview
Completed deals stall, but announced 
transactions point to uptick
Deal count continued to slide in 1Q 
M&A activity in North America & Europe
3 
Source: PitchBook 
*As of March 31, 2018
PITCHBOOK 1Q 2018 M&A REPORT
OVERVIEW
Thomson Reuters' financial and risk 
business. Both transactions reflect 
two prominent themes in today's 
M&A landscape the growing influence 
of private equity and the interplay 
between public and private markets.
The IT and B2B sectors saw their shares 
of M&A activity increase in 1Q, accounting 
for 19.5% and 38.6% of completed 
transactions, respectively. The IT sector 
continues to play a more prominent role 
for strategic and financial acquirers alike, 
commanding a greater share of both deal 
flow and capital invested. Fast-changing 
technology continues to pose a threat 
to existing business models, forcing 
incumbents to either ramp up R&D or 
to acquire more nimble competitors. In 
addition, IT companies are increasingly 
being acquired by businesses in non-
tech sectors, accounting for 45.4% of 
deal flow. Meanwhile, B2C transactions 
accounted for just 15.9% of deal flow in 1Q 
2018. Interest in traditional B2C assets has 
dwindled as tech-focused firms continue 
making inroads into consumer-facing 
segments. Further, businesses that were 
once thought of as being traditional B2C, 
such as retail, are now created as tech-
focused ecommerce firms. 
The number of intercontinental M&A 
deals has also trended upward in the last 
decade, particularly in Europe. In 1Q 2018, 
13.6% of European M&A transactions 
involved a non-European buyerhaving 
increased from last decade's nadir of 
9.0% in 2009. By contrast, the proportion 
of North American transactions with 
an acquirer from another continent has 
grown more slowly, from 6.4% in 2009 
to 8.2% in 1Q 2018. Intercontinental 
activity in Europe is higher due in part 
to the prevalence of North American 
buyers, particularly US-based PE firms 
and Canadian LPs executing direct 
investments, with substantial operations 
across the Atlantic. On the other hand, 
European investors have traditionally 
exhibited a propensity to invest close to 
home. Nonetheless, both regions have 
seen an increase in activity from foreign 
buyers, partially driven by the fact that 
such acquisitions serve as an efficient 
way to expand a company's footprint in 
today's global economy. 
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2014
2015
2016
2017
2018
Materials &
resources
Healthcare
Financial
services
Energy
B2C
B2B
IT
$47.9
$38.5
$0
$10
$20
$30
$40
$50
$60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2014
2015
2016
2017
2018
Materials &
resources
Healthcare
Financial
services
Energy
B2C
B2B
IT
Source: PitchBook 
*As of March 31, 2018
Source: PitchBook 
Source: PitchBook 
Median deal size remains historically high 
Median M&A deal size ($M) in North America & Europe
B2C clout continues to shrink 
M&A (#) by sector in North America & Europe
B2B commands a growing share of capital 
M&A ($) by sector in North America & Europe
PITCHBOOK 1Q 2018 M&A REPORT
4 
Source: PitchBook 
*As of March 31, 2018
Spotlight: Healthcare
Set for a slower 2018 
Following a record-setting year in 
2015, healthcare M&A dwindled for 
two consecutive years and is on pace 
for a slower 2018. 368 deals were 
completed, accounting for 9.4% of 
M&A deals, pacing behind last year's 
tally of 9.7%, and totaling $53.5 billion 
in 1Q 2018. Deals have historically been 
larger in this space than in the broader 
market. The median healthcare 
deal size was $54.6 million in 2017, 
compared to $38.5 million across all 
sectors, though this trend reversed in 
the first quarter of this year. 
A year ago, healthcare dealmakers 
were consumed by the possibility of 
changes to, or the elimination of, the 
US Affordable Care Acta prospect 
that seems less likely for the time 
being.
9.7% 9.4%
6%
7%
8%
9%
10%
11%
12%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018*
2,041 
368 
$0
$100
$200
$300
$400
$500
$600
$700
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
0
500
1,000
1,500
2,000
2,500
3,000
Healthcare deal value ($B)
Healthcare deal count
Source: PitchBook 
*As of March 31, 2018
Healthcare has accounted for a higher proportion of M&A 
volume in recent years 
Healthcare (#) as % of total M&A activity
Healthcare M&A activity
PITCHBOOK 1Q 2018 M&A REPORT
5 
Today, dealmakers are less focused 
on public policy and more attuned to 
the shifting competitive landscape, 
including the recently announced 
partnership among Amazon, Berkshire 
Hathaway and JP Morgan Chase. 
According to their recent press 
release, the trio will attempt to provide 
healthcare benefits to their own 
employees through "an independent 
healthcare company that is free 
from profit-making incentives and 
constraints." Though few details are 
known about the partnership, it will 
certainly influence other firms in the 
spacefrom insurers and pharmacy 
benefit managers to biotech and 
pharmaceutical companiesand could 
be a harbinger of more strategic 
jockeying in the coming years as firms 
look to hedge their bets or forge 
partnerships of their own.
Even without large partnerships 
threatening to take intermediaries out 
of the healthcare supply chain, industry 
players have plenty of obstacles to 
overcome. Regulatory changes in major 
markets remain possible, which could 
change anything from drug approval 
timelines to reimbursement processes. 
In addition, gene therapy, robotics and 
machine learning could permanently 
$54.6
$37.0
$582.7
$512.8
$0
$100
$200
$300
$400
$500
$600
$700
$800
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Median
Average
Source: PitchBook 
*As of March 31, 2018
Healthcare transaction sizes have grown in 
tandem with overall deal metrics 
Median & average healthcare M&A deal size ($M)
Acquired company
Date
Deal size ($M)
Industry
American Medical Response
March 14, 2018
$2,400
Other healthcare services
U.S. HealthWorks
February 1, 2018
$753
Clinics/outpatient services
Oklahoma University Medical Center
February 1, 2018
$750
Hospitals/Inpatient services
RxCrossroads
January 3, 2018
$735
Other healthcare services
The Medicines Company Infectious 
Disease Care Group
January 8, 2018
$270
Drug discovery
Top 5 healthcare deals of 2018
Source: PitchBook 
*As of March 31, 2018
challenge the competitive landscape. 
Another factor that could upend the 
healthcare supply chain is the strong 
demand shown by financial sponsors. 
Healthcare companiesparticularly 
fragmented retail healthcare, such as 
dental offices and urgent-care clinics
are the most common add-on targets 
for PE firms.  
 
SPOTLIGHT: HEALTHCARE
PITCHBOOK 1Q 2018 M&A REPORT
6 
Source: PitchBook 
Source: PitchBook 
Deals by Region & Size
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q
2013
2014
2015
2016
2017 2018
$5B+
$1B-$5B
$500M-$1B
$250M-
$500M
$100M-
$250M
Under
$100M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q
2013
2014
2015
2016
2017 2018
$5B+
$1B-$5B
$500M-$1B
$250M-
$500M
$100M-
$250M
Under
$100M
The trend toward larger deals continues 
M&A (#) by size
The lower & middle ranges of the market see 
increased portion of deal value 
M&A ($) by size
$1,785$1,136$692$1,034$1,139$1,299$1,271$1,823$2,130$2,156$1,919$32310,134
8,763
6,903
8,719
10,006
11,023
10,553
13,193
14,198
12,705
11,688
2,402
Deal value ($B)
Deal count
$1,218$806$409$648$887$859$960$1,165$1,315$1,280$1,162$2038,416
7,323
5,773
7,855
9,960
9,483
9,717
10,682
12,209
11,200
9,431
1,494
Deal value ($B)
Deal count
Off to a slower pace than in past years 
M&A activity in North America
European volume at a slow start to 2018 
M&A activity in Europe
Source: PitchBook 
*As of March 31, 2018
Source: PitchBook 
*As of March 31, 2018
PITCHBOOK 1Q 2018 M&A REPORT
7 
Spotlight: Divestitures
Uptick in announced deals signals cyclicality
$512$334$234$459$483$483$562$851$902$755$672$923,161 2,932 3,094
3,844
4,757 4,695 4,651
5,501
6,154
5,169
3,829
618
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal value ($B)
# of deals closed
Even after the recent decline, other factors indicate 
divestitures are primed to accelerate 
M&A divestitures
Source: PitchBook 
*As of March 31, 2018
M&A activity has historically exhibited 
a high degree of cyclicality. With 
dealmaking steadily increasing over 
the last decade and hovering near all-
time highs, speculation has intensified 
that we're nearing the end of the 
cycle despite the flurry of announced 
deals seen early in 2018. Several signs 
suggest that the cycle may be ready 
to turn, including elevated pricing and 
relatively high levels of debt usage. 
Another key indicator is an uptick 
in the number of carveouts and 
divestitures, as many companies are 
looking to slim down after the recent 
buying binge. While some companies 
are using these deals to refocus on 
their core business, other divestitures 
are being pursued in an effort to 
placate regulatory bodies, which have 
been exhibiting more scrutiny of many 
large-scale deals.
Carved-out business
Announced date
Deal size ($M)
Industry
Innogy
March 11, 2018
$53,006
Energy production
Thomson Reuters (Financial and Risk 
business)
January 30, 2018
$17,000
Financial software
AccorInvest
February 27, 2018
$5,438
Hotels & resorts
Federal-Mogul Holdings
April 10, 2018
$5,400
Automotive
Westinghouse Electric Company
January 4, 2018
$4,800
Alternative energy equipment
Top 5 announced carveouts of 2018
Source: PitchBook 
*As of March 31, 2018
PITCHBOOK 1Q 2018 M&A REPORT
8 
$308.6
$373.4
$0
$50
$100
$150
$200
$250
$300
$350
$400
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018*
This development has yet to 
materialize in our completed 
transaction data, with just 618 
completed deals and $91.6 billion 
invested in 1Q; however, we recently 
have seen robust activity in announced 
deals of this nature, with 463 
transactions totaling $149.0 billion that 
have yet to close. We expect this trend 
to accelerate in the coming quarters; 
according to a recent EY report, 87% 
of companies plan to initiate their 
next divestment within the next two 
years, compared to just 43% in 2017. 
Since many of these assets will be sold 
following failed integrations or due 
to regulatory pressure, we anticipate 
that potential acquirers may be able to 
find discounts relative to the elevated 
prices being paid for other M&A 
transactions.
$308.6M
average size of divestitures  
closed in 1Q 2018 is below that of 
last year's tally, but persists at a 
historically high level
Divestitures have persisted at high levels in recent years 
Average divestiture size ($M)
Source: PitchBook 
*As of March 31, 2018
But that does not mean that divestiture 
deals will necessarily be small. Indeed, 
the sizes of recent carveouts and 
divestitures have been particularly 
noteworthy; the median divestiture 
completed in 1Q 2018 was $308.6 
million, compared to a median of 
$257.4 million over the last decade. 
The median grows to $583.0 million for 
deals that are announced but not yet 
closed, including Unilever's $13.9 billion 
divestiture of its spreads business and 
Blackstone's announced $17.0 billion 
buyout of Thomson Reuters' financial 
and risk business.
SPOTLIGHT: DIVESTITURES
PITCHBOOK 1Q 2018 M&A REPORT
9 
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