Recently Mergermarket released their latest update on quarterly global M&A activity. Mergermarket, part of The Mergermarket Group, is an independent M&A intelligence tool used by financial institutions to originate deals. It provides proprietary intelligence on potential deal flow, potential mandates, and valuations. I have been using their data for years and have always found it to be quite accurate and compelling.
As most analysts have been indicating, M&A activity as measured by volume of deals is on par with the first quarter of 2010 and is up dramatically when compared to the same quarter in 2009 (which was the bottom of the last M&A cycle). This is shown below – see the red line and red boxes.
However, as the preceding chart indicates the value of closed deals is up dramatically so far this year. In fact, worldwide deal value is roughly 20 percent higher than the value of deals closed in first quarter of last year, and roughly 40 percent higher than the first quarter of 2009. This is a noteworthy increase in overall deal value and activity. It tells us that acquirers are shaking off fears of a “double-dip” recession and are quietly expanding market share by acquiring other companies. This upward trend should continue through the rest of the year as corporate strategics are sitting on nearly $1.9 trillion in capital in the U.S. alone and equity firms, likewise, have nearly $500 billion to invest.
What I find most interesting is that the vast majority of these deals closed worldwide were valued below $250 million.
Global M&A Deal Size Breakdown
Source: Mergermarket M&A Insider – April 2011
As shown, nearly 90 percent of the deals closed throughout the world were below $250 million. This is what is typically called the “.” Chances are good that if you are the owner of a business, you are classified in this group based on your size. If so, doesn’t it amaze you that such a significant percentage of the deals are middle-market deals?
Most folks I talk to are shocked to learn this. Since billion dollar deals get all the press coverage, mostassume that those are the lion’s share of deal closings. As you can see, nothing is further from the truth.
Now that it is clear that M&A activity is on the upswing after several years of declines, isn’t it time that you began to consider the future of your company and your personal financial security? Having just survived the worst recession in history, now may be time for you to initiate yourplanning process.
Coming Up: Tomorrow we will look at the Mergermarket data for North America.
© 2011All Rights Reserved