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2016 sees more than half a trillion in broken deals: 7 things to know

Nearly $570 billion of mergers and acquisitions have been pulled in 2016, reports Bloomberg.

Here are seven things to know.

1. The death of nearly $570 billion in deals this year represents the most since the lowest point in the 2008 financial crisis, according to the report.

2. In the report, the upward movement in the number of defunct deals is attributed to the over-ambition as well as "the harsher regulatory environment and the willingness politicians to scuttle deals viewed as not in the national interest."

"It seems the general level of investor support for transactions ‎encouraged companies to push closer to regulatory limits at the same time that those limits were getting tighter," Peter Tague, co-head of global M&A at Citigroup, told Bloomberg. "But what was really unusual about 2016 was not the number of transactions withdrawn, but the size of those transactions that got pulled."

3. According to data compiled by Bloomberg, the largest defunct deal of 2016 was New York City-based Pfizer and Dublin-based Allergan's agreement to merge for a total enterprise value of about $160 billion. U.S. pharmaceutical giant Pfizer scrapped its proposed takeover of Allergan last April after the federal administration took aim at deals that would move companies overseas to save on taxes, reports The Washington Post.

4. Companies and their advisors have considered changes to their M&A strategy due to the perception of an emboldened regulatory response, according to the report.

"One of the trends we are seeing is an increase in deals structured as mergers of equals," Anu Aiyengar, head of North American M&A at JPMorgan Chase & Co., told Bloomberg. "Despite being harder to put together, they are attractive in an environment where there is political and regulatory uncertainty because the business risk is shared by both companies."

5. In 2016, however, many buyers were simply outbid or found themselves trying to buy from an ultimately unwilling seller, reports Bloomberg.

6. The publication notes that the buyer-seller disconnect this year was, in part, due to the strength of the equity market, among other reasons.

7. Moving forward, M&A bankers expect the regulatory environment to change, if not quite ease, under President-elect Donald Trump, according to the report.

 

 

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