San Diego Business Journal

The value of mergers and acquisition transactions in San Diego in 2016 grew 157 percent over the prior year — but 88 percent of the total deal value, $54.06 billion, was attributable to one agreement: Qualcomm’s decision to buy NXP Semiconductors N.V. for $47.6 billion.

Without that deal, which hasn't yet closed, the total deal value for San Diego would have been about $6.46 billion, or 69 percent below the previous year, when the value of the deals made locally was about $21 billion. (Qualcomm has said it aims to close its acquisition of the Netherlands-based firm by the end of the year.)

That’s according to the data from locally-based boutique investment firm W Partners, which publishes quarterly M&A reports. W Partners, which is headquartered in San Diego and has a satellite office in Salt Lake City, advises middle-market companies and family offices in the western United States.

More M&A deals were made in San Diego in 2016 than in the previous year, the W Partners data show. While deal value in 2016 would have been down from the prior year without the Qualcomm announcement, deal volume was up: The number of deals in the region increased about 4 percent in 2016 to 222 from 213 the prior year.

The largest San Diego deal to close in the fourth quarter, which saw 54 transactions, was the acquisition of Vista’s Glacier Water Services Inc. by North Carolina-based Primo Water Corp. for $255 million, W Partners said.

In that quarter, half of the transactions made in San Diego were in the health care and technology sectors, the firm reported. Nearly 20 percent of deal volume was activity within the consumer discretionary sector; double the volume that segment recorded in the same quarter of the prior year.

Nationwide, the volume of middle market deal activity in the fourth quarter was down 12 percent from the same quarter of 2015 and down 7 percent over 2015, W Partners said. However, the average deal size was up in 2016 by 10 percent compared to the previous year, and total deal value was higher.

“Moving forward, corporate executives and private equity investors have expressed that activity is poised to accelerate, perhaps significantly, extending the increase in deal-making seen during the final months of 2016 and, potentially, reversing the slide of the early part of the year,” W Partners said. “In particular, executives point to potential economic initiatives touted by President Trump of lowering the corporate tax rate, infrastructure spending and deregulation as catalysts to spur deal making.”