Will the 2014 M&A Surge Roll into 2015?
It’s a matter of record that 2014 is becoming a great year for dealmaking. Prior to Q4, 2014 had 7,823 transactions, totaling $1.3 trillion, says Dealogic.
1 October 2014
It’s a matter of record that 2014 is turning out to be a great year for dealmaking. Prior to Q4, 2014 had already seen 7,823 transactions, with a total value of $1.3 trillion, says Dealogic. Additionally, the deal value is up nearly 67 percent compared to the same time last year.
The top three deal sectors, with their deal value, were:
- Health care ($245 billion)
- Telecommunications ($201 billion)
- Technology ($138 billion)
A handful of billion-dollar-plus deals significantly contributed to the surge in deal value:
- AbbVie’s acquisition of Shire for $54 billion
- The $70 billion Comcast-Time Warner deal
- Facebook’s acquisition of WhatsApp for $19 billion
What Makes a Great Deal Environment?
Some of the underlying factors for this hot deal environment include a tepid post-recession economic climate, forcing companies to create value via inorganic growth. Other contributors to the M&A resurgence are:
- A highly competitive market
- Easy access to capital
- Low interest rates
- Excess cash flow
Into 2015 with M&A on the Upswing
Additionally, private equity deals are also on the rise. In the first three quarters of 2014, private equity was responsible for $126 billion in U.S. deal volume. Besides that, there was a jump in cross-border M&A activity, with this sector hitting $205 billion in value, says Fox Business.
With the financial crisis receding behind us, the M&A outlook ahead looks positive. The latest Intralinks Deal Flow Indicator data, compiled through the end of June 2014, shows 16 percent quarter-on-quarter (QoQ) and 12 percent year-on-year (YoY) increases in early-stage global M&A activity. Based on the results so far, we can expect to see more growth in the next six months.