M&A Activity on the Rise?

Is M&A back on the the rise? The attention grabbing news of potential deals between Disney and Marvel Entertainment last week and now between Kraft Foods and Cadbury might make you think so.

In fact, many analysts agree. As the market rises, potential buyers might be feeling that the bargain prices seen at the start of the rally may have been lost but there is still value to be had before valuations run even higher. Here are what the numbers show:

2009 YTD M&A Activity (includes Kraft / Cadbury)

  • $1.3 trillion globally, down 37.9% compared to same time 1 year ago
  • $550 billion US, down 46.5% compared to same time 1 year ago
  • Avg deal size: $54 million globally, $87 million US

  • Biggest deal of the year: Pfizer / Wyeth valued at $64 billion

The chart below tracks activity over the past 20 months. After a big drop a year ago, deals began to pick up in March and again in June. However, as the markets rose in July and August, M&A activity stayed on summer vacation, with the number of deals falling 3% and 18% respectively on a month over month basis. On a dollar basis, the change is even greater with drops of 47% in July and 32% in August for global deals and declines of 20% and 61% respectively for US based deals.

Now 9 days into September, maybe the tide is turning once again. The $31 billion so far in US deals already matches all of the August deals combined.

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