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M&A deal value dips 12% in 2017 on drop in deal sizes: Report

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Mumbai, Mar 23: Even as the number of merger and acquisition (M&A) deals reached a record high last year, a fall in deal sizes led to a 12 per cent decline in the total deal value to USD 46.8 billion, a report said today.

The current year looks promising for deals on stable macroeconomic environment but activity will be largely concentrated on the domestic front, consultancy firm EY said in a report.

The M&A deal volume shot up to a seven-year high of 1,022 for 2017, led by domestic deals in sectors like telecom, retail and consumer products and technology, it said.

However, by value terms, there was a decline.

“While there was an increase in number of deals, they were concentrated in the lower bands of around USD 20 million,” said Amit Khandelwal, partner, EY.

Corporates held back from venturing into big ticket acquisitions, resulting in a fall in over USD 500 million deals to 13 from the 21 recorded in the year-ago period, according to the consultancy.

Regulatory issues also impacted the deal numbers, Khandelwal said, specifying “timeline of some of the big-ticket deals got stretched due to increased scrutiny by the regulators and complex deal structures.”

On the cross-border front, there was a 71 per cent decline in deal volumes at USD 8.9 billion through 340 transactions, the report said, adding that the number of overseas deals were down 7 per cent.

The US was the most active with 71 inbound and 45 outbound deals, followed by Singapore with 18 inbound and 9 outbound deals and Japan with 23 inbound and 1 outbound deal.

For 2018, EY expects the domestic deals to continue to dominate the activity, with many established players taking the inorganic route to expand or consolidate their positions.

In addition to consolidation and market penetration, the consultancy said deal activity will be triggered by disruptive pressures such as technological innovation and digitalisation.