Q2 2010 Deal Flow: Rogue Wave or Rising Tide?

So what’s happening in the deal market? The DFI reports significant increases in the number of deals happening in Q2 2010, both vs. Q1 of this year, as well as over Q2 in 2009. While the DFI showed a mild uptick in Q1 2010 over Q4 2009, we saw a significant jump in March, a trend which continued into Q2.


20 August 2010

Last month, we released the Intralinks 2010 Q2 Deal Flow Indicator (DFI). The DFI is based on the volume of M&A deals Intralinks was proposed for use on by deal teams over the course of the quarter. Given the high number of potential deals we’re pursuing at any one time as a leading virtual data room and M&A solution, the DFI offers a unique perspective on overall M&A market trends.

So what’s happening in the deal market? The DFI reports significant increases in the number of deals happening in Q2 2010, both vs. Q1 of this year, as well as over Q2 in 2009. While the DFI showed a mild uptick in Q1 2010 over Q4 2009, we saw a significant jump in March, a trend which continued into Q2.

The recently released Thomson Reuters Investment Banking Review for Q2 reported that the value of global deals was up 9% over last year and the highest since 2008, with an overall value of $1.1 trillion. Although we saw the largest growth in market activity in EMEA (19%) in Q2 from a down Q1, Thomson Reuters reported that 32% of the volume increase was in emerging markets, where we have seen significant growth as well (65%) in H1 2010 over H1 2009.

While the DFI reported an increase of 8% in North American deal activity in Q2 from Q1, CFO.com commented that the value of deals done in the first half of 2010 was the worst it’s been since 2003. So what’s going on with value vs. volume? While overall value is reported as high, this seems to be centered in emerging markets, and specific sectors such as energy and utilities. When you look beyond those key areas of growth, we find that although volume is up across the board from what we’ve seen over the last 18 months, value seems to be low. Companies, which publications like the Chicago Tribune and LA Times were consistently citing as cash flush at the end of Q1, have begun to make strategic investments, especially as less healthy companies divest assets to remain afloat or change their business. Companies over the last quarter have been buying up assets at an increased rate but at decreased prices with their strategic cash positions. While some sellers’ expectations remain overly high, many more come to the market now with more reasonable valuations in mind and can get deals done rather quickly. Will the trend continue? We’ll just have to wait and see what the rest of the year has in store for M&A.

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.



Matthew Porzio

Matthew Porzio

Matt Porzio joined Intralinks in 2003. As SVP Marketing & Strategic Business Development, he is responsible for managing and driving the strategic direction for Intralinks Dealspace including virtual data room and full deal lifecycle solutions for the M&A, Private Equity, Advisory, Corporate Development and Restructuring communities. Before joining Intralinks, he was a senior associate at Metzler, a German advisory firm, focused on cross-border M&A transactions.