Clear Skies Ahead: Q1 M&A Activity Up Year-Over-Year

The M&A market kind of reminds me of a plane that hit some turbulence (back in 2008 and early 2009), but since then and according to our latest quarterly Deal Flow Indicator the market has regained cruising altitude. Year-over-year results for deal activity are up a healthy 24% for Q1 2011 and 72% from the bottom of the market in Q1 2009. It appears that M&A activity levels have normalized.


2 June 2011

Business travel is always the same, more or less, anywhere in the world you go. Security checkpoints, flight delays, and lines at the ticket counter are all a predictable part of what you’re in for when you fly the friendly skies. The only thing that can make flying a bit unpredictable is the weather. I, for one, hate turbulence. I’m not a nervous flier, I just don’t like feeling bumps in the air at 33,000 feet.

The M&A market kind of reminds me of a plane that hit some turbulence (back in 2008 and early 2009), but since then and according to our latest quarterly Deal Flow Indicator the market has regained cruising altitude. Year-over-year results for deal activity are up a healthy 24% for Q1 2011 and 72% from the bottom of the market in Q1 2009. It appears that M&A activity levels have normalized.

In fact, the market seems to have entered a stretch of clear skies, with year-over-year deal activity up regionally across the board, with the strongest growth in Latin America. In our own backyard, despite the pressure on the U.S. dollar and the uncertain political climate, it’s extremely encouraging to see the North American market gaining some airspeed, with deal flow increasing both sequentially and year-over-year.

In spite of strong year-over-year growth, Intralinks observed that regional growth remained flat or decreased in Q1 2011 compared to Q4 2010 with the exception of North America, which increased 12% sequentially. Based on what we hear from our vast client base there seems to be different regional factors impacting deal flow; such as the unresolved debt issues in certain European markets, shifting regulatory environments, and the fallout from the Japan disaster. Even so, this market is like a plane that has reached cruising altitude, and is coasting steadily.

All in all, it’s the year-over-year increase in all regions that are a positive indicator that the market is out (and staying out) of turbulent skies, and has essentially returned to pre-crisis levels of activity. Admittedly, valuations aren’t at 2007 or early 2008 levels and truthfully we might not get there anytime soon. Barclays indicates that deal value has increased significantly, term structure has improved, and premiums have moderated in Q1 2011 relative to Q4 2011. Mergermarket reports concur on the trend of increasing deal value which puts global M&A for Q1 2011 at US$ 608.3bn, up 32.7% from the same period in 2010 (US$ 458.4bn).

The M&A market emerged from turbulence in 2010 and has been flying at cruising altitude ever since. Some mega deals in telecom and tech have provided a bit of throttle for sellers; however, right now it is more about deals being put in play and continuing to cruise along steadily. But some of these deals are creating optimism on the sell side and increasing pressure to put capital to work on the buy side. Some additional airspeed was also gained in sectors like life sciences and Industrials in this past quarter and cautious optimism remains that clear skies will prevail.

Looks like the fasten seat belt sign is off for now, and there’s a bit of a tail wind. Happy flying!

The author’s comments reflect the data reported in the Intralinks Deal Flow Indicator TM (the “DFI”) for the first quarter of 2011 published on May 18, 2011. The DFI and the author’s comments are based on observations and subjective interpretations of M&A deal activity and are not intended to be indicators 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.