Dutch M&A activity grows for sixth consecutive year

The number of large and midsized mergers and acquisitions in the Netherlands has increased for the sixth year in a row. 

According to new research by KPMG, in 2019 just over 850 transactions were closed (852), 12% more than the 760 deals in 2018. Together these deals accounted for a deal value of €80 billion, an increase of more than 60% compared to compared to the previous year, when €49 billion in mergers and acquisitions were closed. 

“This development makes the Netherlands a real exception,” said Danny Bosker, a partner at KPMG Corporate Finance, referring to the decrease in both the total value and the volume of deals at a European and global level.

The number of transactions globally fell from more than 21,000 to nearly 20,000 and the total value fell slightly, from €3,021 billion in 2018 to €3,010 billion in 2019. The total number of transactions in Europe fell from around 8,500 to around 8,200. The deal value also fell, from €910 billion to €843 billion. 

Seven out of ten deals were closed by strategic buyers, seeking to buy scale, extend horizontally or vertically in their market or acquire capabilities such as innovation or talent. Financial investors accounted for 28% of all mergers & acquisitions, a percentage similar to that observed in previous years. 

Bosker: “The fact that, despite the current record high price levels, financial investors still account for around a third of all transactions in the Dutch market says something about the amount of available capital ('dry powder') and also indicates the pressure experience private equity to put their money into action by actually making investments.” 

Investors – private equity firms, family offices or funds – mostly acquire (61% of financial deals) as part of a market entry strategy, commonly buying the company from a non-financial party. Deals between two financial parties account for 14% of all financial transactions. The remaining share of deals relates to exit deals.

Throughout the years, targets in the industrial sector have consistently generated the majority of transactions for financial investors. However, technology deals have grown significantly emphasising the importance of digitalisation in the current economy.

International deal activity

The Netherlands is according to KPMG’s data popular among foreign investors. 60% of the deals had a cross-border nature, 220 of which concerned a Dutch bidder acquiring a foreign target (“import”) and 303 transactions in which a foreign buyer acquired a Dutch target (“export”). Around 40% of all deals (329 transactions) were closed by two parties of Dutch origin. 

According to Bosker, Dutch companies are increasingly being eyed by international stakeholders. “In 2017 and 2018 the ‘net export’ amounted to around 60 transactions. Last year this difference increased to 83 transactions, a jump of more than 35%.” 

He added that this demonstrates the quality and attractiveness of Dutch companies, further confirmed by record valuation levels during 2019. Valuation levels in terms of Enterprise Value / EBITDA multiples have further increased in the Netherlands, to a median EV/EBITDA of 11.8x. In comparison, globally this metric fell to 11.1x and across Europe the number dropped to 10.8x. 

Countries eager to acquire Dutch companies are the UK, France, Belgium and Germany. In line with previous years, US buyers demonstrated the strongest appetite for Netherlands based assets, last year acquiring a total of 64 companies. Germany ranks as the number one geographic region for Dutch buyers acquiring foreign assets, followed by the US, Belgium, France and the UK.