What's the State of Play for Global M&A? Find out with the Q4 2009 Intralinks Deal Flow Indicator

Firstly, the equity markets seem to have achieved a level of stability, with US, European and Asian markets all posting gains for the year. This has continued to narrow the valuation gap that existed in the more volatile months. Secondly, corporates with cash reserves, a resurgence of financial sponsor activity and a slight ease in the credit markets has helped build a small wave of M&A activity in recent months.


14 January 2010

With global M&A deal activity slipping down to 22% from 2008 levels (according to Dealogic) and some suggesting that we may have seen the bottom of the M&A market in 2009, I think it's safe to say that we’ll all be glad to say goodbye to 2009. And what better way to say farewell and to round the year off than with our Q4 Deal Flow Indicator results.

For the un-initiated, if there are any of you left, the Intralinks Deal Flow Indicator is our quarterly inside view of the trends that we are seeing in the global M&A market. What’s unique about the Intralinks Deal Flow Indicator is that the results are drawn from the total volume of virtual data rooms (VDRs) that were proposed for use by the deal teams initiating projects during the quarter. In many cases, deals are active on VDRs as many as three months before they are publicly announced, so we are able to highlight trends and activity in the markets as they occur.

Intralinks Deal Flow Indicator

Our Q4 results highlight a 12% increase in global deal activity in Q4 when compared to Q3 2009. What’s more, the number of deals in Q4 2009 is up to levels seen back in Q1 2008 and comes on the back of three straight quarters of double-digit deal growth in 2009. For more details read the full report here.

Given the freezing weather conditions experience across Europe and much of North America in recent weeks, it’s pleasing to see that the regions' M&A activity was less frosty with EMEA seeing a hot 20% increase in deal activity in Q4. This uptick was supported by a 12% increase in North America and a 9% increase in Latin America.

From a sector perspective, we’ve seen double-digit increases in the number of telecoms and media deals, while industrial, manufacturing and energy sectors have seen more modest increases.

When comparing full-year year activity levels, we see a 17% decrease in the number of deals, although the last three quarters have seen consistently improving volumes. This positive data would indeed point to a brighter start to 2010 and can be explained by a number of contributing factors.

Firstly, the equity markets seem to have achieved a level of stability, with US, European and Asian markets all posting gains for the year. This has continued to narrow the valuation gap that existed in the more volatile months.

Secondly, corporates with cash reserves, a resurgence of financial sponsor activity and a slight ease in the credit markets has helped build a small wave of M&A activity in recent months.

However, it may take some time before we are back to the “good old days” as Dieter Turowski, the head of European M&A at Morgan Stanley, suggests in this article on Bloomberg. But it’s a new year so let’s try to remain positive. The worst looks to be behind us and the next Deal Flow Indicator (Q1 2010) will tell us more about how 2010 is shaping up.

Lastly, as a little New Year’s gift, here’s another chance to view our global corporate development study in which three senior corporate M&A practitioners gave their views and opinions on global corporate development trends and issues for the coming year.