M&A Prospects for 2014 Unclear


January 16, 2014

Some high profile and large sized M&A deals of late (Google/Nest, Charter/Time Warner and Jim Beam/Suntory) may make it look like dealmaking is in for a blockbuster year but analysts are hesitant to be overly optimistic. MarketWatch points out that M&A volume has been “leaping forward and lurching back” since the aftermath of the financial crisis.

Global volume was up 9% last year above a mediocre 2012. Yet the year’s volume was still down 8.2% from the record year of 2007. More striking, says MarketWatch, is that the number of deals — 37,212 — was the lowest annual total since 2005, citing Dealogic. Furthermore, valuations of US targets was just 20% in 2013, down from 33% in 2012 and a record low average.

Forbes says the conditions for M&A are good for 2014 but it hinged hopes on PE players being more active, business owners being more open to M&A, and international economic stability being maintained throughout the year. Elsewhere, it was pointed out again that M&A in recent times is trending down.

Activity in the US, typically the largest market has been declining for three years in a row, according to DJX VentureSource, cited in a Venture Capital Dispatch article that discussed the lack of acquisitions of VC-backed startups.

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