4 | The Deloitte M&A Index Q4 2014 5 | Factors set to influence M&A in 2015 1 Divestments and spin-offs Figure 6. Global divestment and spin-off volumes ($bn), 2008 – YTD 2014 Divestment values have already reached $129 billion in 2014, the highest since 2011. 350 Many companies are now actively evaluating 300 their portfolios and disposing of non-core assets to refocus and build a platform for 250 growth. For instance, Procter & Gamble 200 announced a major strategic review of its 150 portfolio and is planning to divest several high-profile brands such as Duracell. Pressure 100 from shareholder activists is increasing, and it 50 is estimated that 45 per cent of the activists who initiated public campaigns in 2014 made 0 2008 2009 2010 2011 2012 2013 2014 demands relating to M&A activities. YTD Volume of divestments Volume of spin-offs While the last couple of years have been a subdued time for spin-offs, there were many Source: Thomson One Banker; Mergermarket; Deloitte analysis high-profile announcements in the second half of the year. HP, eBay, Symantec and Bayer are some of the companies that announced spin-off plans and these are expected to keep the markets busy in 2015. The return of private equity Figure 7. Financial sponsor investments and exits (2008 to Q1 – Q3 2014) Private equity (PE) firms had an active 2014. In just the first three quarters, they have 400 made more exits than in the whole of 2013. 350 300 The buoyant IPO markets during the year 250 favoured private equity exits, and PE firms 200 had already completed more than 200 exits 150 through IPO by Q3 and are on course for a 100 50 strong year-end performance. Since 2008, 0 2008 2009 2010 2011 2012 2013 Q1 – Q3 the financial sponsors have made $1.74 trillion 2014 through exits, and it was matched by $1.7 trillion in new investments. Exit values ($bn) Investment value ($bn) Source: Thomson One Banker; Deloitte analysis Preqin estimates that the private equity sector have around $1.19 trillion in ‘dry powder’ and with a number of funds approaching their maturity, we can expect PE firms to start investing more in 2015. 1 Divestment refers to the agreed sale of an asset or assets from one company to another, distinguished from other transactions by the fact that it is the vendor which actually initiates the transaction. Spin-off refers to the tax free distribution of shares by a company of a unit, subsidiary, division, or another company’s stock, or any portion thereof, to its shareholders.