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Cross-sector deals remain healthy, often as a way to acquire key technologies, expand business models, or enter new geographical markets or new market segments. Established companies with solid cash flow are being targeted by `other-sector' firms seeking proven businesses models or technology that can rapidly improve efficiencies, drive growth or increase competitive advantage. 

Phil Isom

KPMG analysis reveals that strategic sector convergence deals, on the other hand, are on a downward trend. The main exception is financial services, which continues to see a rise in deals involving non-traditional buyers, reflecting convergence as well as a push for diversification and efficiency. A growing number of these buyers are Chinese conglomerates from construction and real estate, industrial, technology and energy sectors, hoping to increase their exposure to the financial sector, cross-sell financial products to existing clients, access low-cost finance and gain risk management capabilities.

Sector convergence deals chart

Resilience is one of the new buzzwords as leaders look to make their organizations more sustainable in the face of severe disruption. According to KPMG's 2019 Global CEO Outlook, which surveys 1,300 CEOs from the world's largest organizations, 87 percent of respondents say cross-border deals  - especially in emerging markets  - can help them become more resilient. 

Hot interest in cooler markets?

Latin America and Eastern Europe are the two most popular regions in which to expand. However, KPMG analysis suggests the broader outlook for cross-border transactions is less buoyant, with investors in Europe, the US and beyond displaying an increasingly inward focus that favors domestic deals.

Sector view

Select each sector for more information.

Banking

Consumer & Retail

South America
10 year trend

The rise of private equity

Private equity (PE) is playing an ever-increasing role in M&A  - sponsored deals make up 39 percent of the deal market  - and continues to drive deal volume. The sector has grown to US$1.5 trillion in the past few years and is estimated to have more than US$1 trillion in `dry powder' looking for deal opportunities. This intensifies competition and also means that many companies themselves are potential PE targets. Despite these significant trends, however, corporate deals are still the main driver of overall deal value. 

Sponsored deals vs. overall deal market
Danny Bosker
Dan Tiemann

Learn more

To learn more about how private equity firms are leveraging data science, read our latest report The information edge

Click below to read related chapters of the Dealing with disruption report.