Philadelphia regional M&A update: Q1 2018

M&A activity

There were 144 transactions that closed in the Philadelphia regional market during the first quarter of 2018 (Q1-2018), a decrease of approximately 9.4 percent from the 159 closed transactions in the prior quarter. The 144 closed transactions mark a decrease from the 146 closed transactions during the same period in 2017. Additionally, aggregate reported transaction value decreased approximately 52.5 percent from the first quarter of 2017 (Q1-2017).

The pace of M&A activity slowed in North America in Q1-2018, following a strong Q1-2017. In Q1-2018, M&A activity resembled dealmaking during 2011 to 2013 more than it did the recent boom from 2014 to 2016. Q1-2018 M&A volume decreased 14.6 percent while transaction size increased 40.9 percent compared to Q1-2017.

The slowdown comes despite sound economic indicators in the U.S., including sustained growth in manufacturing, strong corporate earnings growth and record-high CEO sentiment. While corporations in general are already operating from a position of strength, recent tax legislation and repatriation of foreign earnings are expected to further bolster balance sheets and give a boost to M&A in 2018. U.S. firms are expected to bring back $300-400 billion in cash, which is expected to be used on a combination of dividends, stock buybacks, capital expenditures and acquisitions.

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