The Deal magazine sponsored a webcast on the current environment for mergers and acquisitions. Details follow; thanks to Nathan Dutzmann for the analyst coverage.
- First-quarter and second-quarter private equity deal flow: 674 deals for a total of $75.6 billion. There were more large ($1 billion or more) deals than in 2010.
- Volume is up slightly over 2010 and significantly over 2009, but very far below 2007 highs.
- There was also an increase in exits (though still well-below pre-2008 highs).
- The current market is robust, particularly for sellers as multiples are on the rise.
- 2007 high was about 10.5 times EBITDA; dropped to about 5.5x in 2009, now up around 8x.
- Some PE funds are partnering with corporates on deals (i.e., part-financial/part-strategic deals).
- Some financial innovations are being seen in strategic deals, but they have not bled over into PE deals.
- Deals are taking longer since 2008.
- Much more due diligence (by buyers and sellers).
- More worry about event risk (particularly U.S. debt ceiling, at present).
- More worry about ongoing availability of financing.
- In the near-term, financing looks to be increasingly available and returns on deals have been looking good. (All contingent on event risk not manifesting, of course.)
- Large institutions' (e.g., pension funds) interest in PE is on the rise again.
- The number of strategic deals is increasing, so there is competition from corporates.
- Budget pressure will likely reduce interest in defense and aerospace deals.
- Otherwise, good deal flow seems to be happening in many sectors and many geographies.
