Sectors – what’s hot in 2016?
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Zephyr, the company deals database, has reported that thus far in 2016, £389.45 billion has been generated from M&A sales involving UK targets. Zephyr’s software allows us to narrow down this data to see exactly which sectors are the most popular with buyers. The table below shows the four ‘hottest’ and most popular sectors.
It can be seen from the table that the most popular sector is the Financial Services, and Experian’s UK M&A review confirms this. M&A deals within this sector alone have accounted for over a quarter of all deals in 2016.
Zephyr reports that the second most popular sector is the Food and Tobacco Industry. The values generated are only known for 94 of the completed deals within this sector, yet these 94 deals have generated the combined value of a staggering £106.2 billion. As such a high collective value has been generated from a relatively small number of deals, this indicates that each M&A transaction in this sector is valued very highly.
The Mining and Extraction and IT Services sectors have also been attractive to investors this year. M&A deals within both industries have each generated around £54 billion to date in 2016. According to Experian’s review, M&A deals in the IT sector have increased by 17% during the first 9 months of 2016 in comparison to the same period in 2015.
KPMG expected in early 2016 that the sectors that would have the most M&A deal activity would be those which are characterized by transformation, (examples of such sectors were IT, Pharmaceuticals, Energy, Consumer Markets and so on). With reference to Zephyr’s records, KPMG’s expectation can be assumed to be mostly true. M&A deals in the Utilities sector, companies who specialise in gas, water and electricity, have generated £51.4 billion to date in 2016. As mentioned above, the IT sector also has a high deal activity.
Although Zephyr reports that the M&A transactions involving companies in the Construction sector have only generated £3.5 billion in 2016, Experian’s report has shown that this industry has experienced an increase of almost 25% in the total number of deals since 2015. Experian also reported that within the Construction sector, a number of ‘bigger players’ have recently been reporting robust performance results alongside a positive outlook for the future.