M&A Activity Is Within Reach Of All-Time Record

Total M&A value in 2015 is trending 42 percent higher than 2014s total. Healthcare, financials and information technology sectors have led the 2015 M&A wave.

A new report by S&P Capital IQ analyst Richard Peterson focused on the explosion of M&A deals in 2015. By the time 2015 draws to a close, it may go down as the biggest year for M&A in history.

The Numbers

The combined total value of all M&A deals so far this year is $1.69 trillion. That number represents a 42 percent increase over the running annual total this time last year.

At this point, it seems almost certain that this year will eclipse the all-time record total for M&A activity of $1.73 trillion set way back on 2000.

Value

However, Peterson added that buyers in 2015 seem to be getting better deals than buyers in 2000 were getting, as the 2015 total enterprise value to EBITDA multiple of 15x is much lower than the 21.1x average multiple of 2000 deals.

Buyers in the consumer staples sector have paid the lowest multiple of any sector this year at just above 11x.

Dominate Sectors

According to Peterson, healthcare, financials and information technology sectors have accounted for 56 percent of the deals so far in 2015. Back in 2000, these sectors comprised only 46 percent of the deal mix.

Besides seeing a record year for deal activity in 2015, totaling over $350 billion, the health care sector was one of the few instances where we observed an increase in valuations from 2014, Peterson added.

The Select Sector Financial Slct Str SPDR Fd (NYSE:XLF) has lagged the S&P 500 in 2015, while both the Health Care SPDR (ETF) (NYSE:XLV) and the Technology SPDR (ETF) (NYSE:XLK) have outperformed on the year.

Disclosure: The author holds no position in the stocks mentioned.

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