Where are business and mergers and acquisitions deals thriving the most now?
The market is certainly evolving and seeing more cross country and global deals with startups attracting capital from diverse investors all over the world. However, there are definitely M&A hubs that stand out.
While the M&A outlook remains bullish, some metrics reflect a slowdown in 2019 over 2018. The M&A market hit a new record at $4.1T last year. An EY survey in April showed that the appetite for deals is at a new 10-year high. 92% of those surveyed predicted a better global market this year. Almost 60% of global companies said they planned to make an acquisition this year. Data from Axios suggests, by some measurements, that the value of M&A deals was down to a 9-year or longer low as of Q2 2019. That suggests substantial room for an M&A deal spree from the second half of 2019, through early 2020.
So, where are the deals happening and likely to happen?
1. New York City
NYC refuses to be toppled as the center of the business world. It has grown in leaps and bounds when it comes to startup activity, funding for startups and of course M&A deals. The New York Times reports $2T worth of deals struck in the first half of 2019.
2. San Francisco
Despite the extreme housing prices, cliche, and homeless crisis, San Francisco continues to refuse to give substantial way to many other destinations. Perhaps, with the exception of NY. In the four years leading up to 2015, AT Kearney reports that Bay Area companies filed over 34,000 international patents. Many of those may still prove to turn into highly valuable startups and M&A deals of their own.
While the city has always been a major global financial capital, London has come a long way in terms of innovation and startup activity. Even in spite of recent tax hikes on the wealthy and foreign property owners, a Global Cities report ranks it as one of the fastest-growing cities for private investments.
5. St. Louis
Don’t underestimate St. Louis. In fact, one of the recent guests on the Dealmakers Show, David Karandish is based in the city. He sold one of his startups for almost $1B, and has raised $23M for another.
7. Los Angeles
LA may not be seen anywhere near as credible as San Fran for tech and venture capital, yet. Though, that is likely to continue to change. This is especially true given Peter Theil’s recent move from the Bay Area to LA, with his funds. One of the top reasons cited for his move was Silicon Valley’s extreme housing costs which often soaked up far too much of the founders’ funds for developing their startups.
8. South Florida
The South Florida tri-county area has been growing in recognition for its tech, startup ecosystem, and international banking. Many New York based firms and executives have been heading south to relocate for not only better weather, but also for far lower taxes.
You may not know where it is on the map, and it may be cold, but there are a lot of large companies in Minneapolis. They range from some of the largest consumer and retail companies to financial firms. Many of these companies can be very active in M&A deals and strategic acquisitions. Here you’ll find 3M, Target, General Mills, Norwest Equity Partners, and more.
10. Hong Kong
Paris, France has substantially moved up the ranks in business. It’s no longer just for romantic weekend trips or buying a chateau in the countryside. The city is a top European hub and will continue to benefit from the rise of startup and M&A activity throughout the region.
The first half of 2019 may have seen a double-digit slow down in inbound deals, and outbound investment has slowed due to external regulations. However, DealDynamics notes that there may be many in-country deals done this year. Further, global private equity may increasingly acquire public German companies such as the recent partnership by Carlyle and Bain for Osram Licht.
While Spain and Europe, in general, may not be most famous for startup and M&A activity, it is growing. According to Deloitte, almost 2,500 M&A deals were completed in Spain last year. 24 IPOs were completed. Technology has been one of the fastest-growing sectors, while healthcare deals rose 103% in 2018. Spain continues to attract massive inbound investment. Madrid stands out as one city with a very competitive level of business activity.
Japanese firms continue to make large investments, many of which are US-born companies expanding into Asia.
Singapore ranks higher than Chicago and even, Toronto and San Francisco on one the global cities’ list for business activity.
There is still big money coming out of China, and the China Venture Capital and Private Equity Association list not only many local firms but also the presence of many other international firms with a solid local presence.
Not as hot as Beijing, but still a major commercial hub.
KPMG reports great growth in Dutch M&A activity and double-digit increases in deals.
Russia only saw $52B in M&A deals last year though, the number of deals has been up, and there has been a great rise in inbound investment (23%). The innovations and technology sector has seen the fastest growth according to KPMG.
Alejandro Cremades is a serial entrepreneur and the author of The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley & Sons, the book was named one of the best books for entrepreneurs. The book offers a step-by-step guide to today‘s way of raising money for entrepreneurs.
Most recently, Alejandro built and exited CoFoundersLab which is one of the largest communities of founders online.
Prior to CoFoundersLab, Alejandro worked as a lawyer at King & Spalding where he was involved in one of the biggest investment arbitration cases in history ($113 billion at stake).
Alejandro is an active speaker and has given guest lectures at the Wharton School of Business, Columbia Business School, and at NYU Stern School of Business.
Alejandro has been involved with the JOBS Act since inception and was invited to the White House and the US House of Representatives to provide his stands on the new regulatory changes concerning fundraising online.