It’s a different story in Europe, where economies have been slower to recover and growth has lagged. While U.S. and European companies were almost equally appealing to dealmakers leading up to the crash, acquisitions on the continent have failed to bounce back. Meanwhile, acquisitions involving Asia-based companies have picked up some of the slack. Those deals now make up almost 19 percent of total transactions, compared with 12.6 percent pre-crisis.
Software Rush
Almost every company can claim it’s a technology asset now, and it shows in the numbers. Deals for tech-focused targets are up 75 percent this year with Broadcom Inc.’s $18 billion acquisition of CA Inc. the biggest of the bunch, the data show.
The San Jose-based company’s chosen target (though let’s not forget it went after Qualcomm Inc. first) reflects a broader trend across the industry, with acquirers favoring software purchases over the semiconductor and computer deals that drove much of the 2015 volume. It’s also an echo of 2007, when the KKR & Co.-led buyout of First Data Corp. propelled software dealmaking to a previous record.
Chipmakers also fall squarely into the category of companies that are increasingly cited as national security concerns when it comes to dealmaking, as trade tensions with countries such as China lead the U.S. to reinforce the measures it will go to to protect proprietary data and assets.
National Champions
Since President Donald Trump touted Qualcomm’s status as a national champion when blocking Broadcom’s $100 billion-plus bid for the company in March, Congress has granted new powers to the Committee on Foreign Investment in the U.S. to review deals by non-U.S. acquirers.
Though the increased scrutiny isn’t limited to Chinese acquirers, it’s stymied cross-border dealmaking with the U.S. While transactions in which a Chinese company bought a U.S. target climbed steadily in post-crisis years to a startling peak in 2015, activity has been decimated in the past two years as capital controls and a harsher regulatory environment curbed M&A.
The intensifying skepticism -- not just of China but of non-domestic dealmakers in general -- is being felt across the industry.
“The market clearly has slowed,” said Mark Shafir, Citigroup Inc.’s global co-head of M&A, in a television interview, citing a five-month straight decline since March and April, when monthly deal volumes were nearing $500 billion.
Domestic deals among U.S. companies account for $1.1 trillion of dealmaking this year, compared to just $316 billion of transactions in which a foreign acquirer bought an American target, Bloomberg data show.
“If you’re doing significant business in a place like China, just given the state of Chinese-U.S. trade relations, you’ve got to think carefully about how long do you want to be hung up, even if you get a deal announced,” Shafir said.