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Global M&A Revival

by

March 16, 2013

Financial Times reports that abundance of cheap debt is helping to “resuscitate” the world of M&A. It is helped by a rise in business confidence, with rallying equity markets, is combining with the re-emergence of interest in M&A by companies and boards. The total value of global M&A reached USD 492.7 billion by the end of February, up 24 per cent on the first two months of 2012, according to data provider Dealogic.

 

Persistent talk of a wide range of large-sized or blockbuster deals has some advisers believing that the revival this year will be more long-lived than a similar revival in early 2011. Activism from investors has emerged as a big driver of deals. According to bankers, of the 40 biggest deals of 2012, 20 of them had an activist shareholder on the register before the transaction.

 

M&A deals in the US are up 94 per cent on the same period last year, while European dealmaking is up just 1 per cent, although at its highest level year-to-date since 2008, according to Dealogic. Reaching emerging markets is another driver for more dealmaking, particularly with consumer-oriented companies.  The article notes that the strength of the debt markets is not only serving to fund larger deals, it is also increasing sellers’ price expectations, which may ultimately put a damper on PE buyout activity.

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