What's the Status on Global M&A Deal Activity? Intralinks' Q1 2010 Deal Flow Indicator Provides some Key Insights

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 M&A deal teams initiating projects during the quarter.

19 April 2010

Like many of those involved in the M&A market, I started the new decade thinking that things could only get better after recent economic challenges, and it appears that there are grounds for optimism. Thomson Reuters recently reported the number of announced deals globally in Q1 was up by four percent compared to Q1 2009 and the deal value has increased by 21 percent over last year. On the back of these positive overtones, I’m pleased to unveil the Q1 2010 Intralinks Deal Flow Indicator results.

For those of you that are new to the Intralinks Deal Flow Indicator, it’s 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 M&A deal teams initiating projects during the quarter. Our involvement in a significant percentage of global M&A deals means this can provide an early view of aggregate deal flow activity and trends.

Intralinks Deal Flow Indicator

On this basis Q1 activity showed a 39 percent increase compared to the Q1 2009 figures and a two percent increase on the Q4 2009 results. We observed a slow start to the year with limited activity in January and February in terms of volume, but things heated up in March with a 25% increase in comparison to February. For more details, read the full report here.

Asia Pacific led the way during Q1 2010, with the region seeing a 20 percent increase in deal activity. This will come as no surprise to anyone following the M&A market. The announced $35 billion acquisition of AIA by Prudential, which was the second largest deal ever in the region, is just one example of the recent growth in activity from emerging markets.

Both North America and Latin America had modest increases in activity with gains of four percent and two percent respectively on Q4 2009. However, although the weather may have warmed up in Europe of late, the results of the deal flow indicator remain cooler, with EMEA experiencing a five percent decrease after peaking in Q4 2009.

In terms of sectors, the results are mixed. We’ve seen indications of double-digit growth in telecom, media, consumer and life sciences M&A activity, but financial and professional services M&A activity has softened after peaking in the second half of 2009. There have also been modest increases in industrial, manufacturing, energy, real estate and technology sector M&A deal activities.

Outside of Europe and a couple of sectors, we can safely say that 2010 got off to a positive start, with the following, noticeable drivers combining to push forward M&A activity in the right direction:

  • The equity markets have seen continued stability with many US, European and Asian indexes all showing modest gains on Q4 2009, helping to further narrow the valuation gap
  • Confidence has started to return based on increased access to capital and still favorable interest rates; we can also see an increasing willingness to use cash positions
  • Cross border activity has increased, especially from the emerging markets, as I mentioned earlier
  • Private equity firms are now looking to monetize portfolio assets, generate returns for investors and pave the way for new investments

Overall, the Q1 2010 Intralinks Deal Flow Indicator results paint a positive picture, and with JP Morgan CEO Jamie Dimon and others suggesting that the threat of a double-dip recession is fading, we believe that there’s good reason to be optimistic about M&A deal activity as we head into the second quarter of the year.

Please Note: The Intralinks Deal Flow Indicator is calculated based on the total volume of Intralinks exchanges that were proposed for use by deal teams that initiated projects during the quarter. The totals are then analyzed by global regions and compared to previous time periods. This report is provided “as is” for information purposes only, and Intralinks makes no guarantee, representation or warranty of any kind regarding the timeliness, accuracy or completeness of its content. This report is not intended to convey investment advice or solicit investments of any kind whatsoever. This report is based on observations and subjective interpretations of M&A deal activity and is not intended to be an indicator of Intralinks business performance or operating results for any prior or future period.