Interest in Corporate M&A High, but Financing Still an Obstacle

Salient points:

Average deal value is up 25% in 2011 versus 2010 and stands at $301 million.
Value is partially attributable to an increase in "mega deals" (greater than $5 billion).
Total volume is relatively flat year-over-year due to the difficult environment of the last few months.
Corporates (a.k.a., "strategics") with large cash reserves can still get deals done.
It's harder for private equities to make purchases.
Many auctions are failing because financing is hard to find and prices are too high.
Some deals are going for double-digit EBITDA multiples.
Excess cash on the balance sheets of strategics is at record highs.
Over $1 trillion of "dry powder" is available.
This is driving the uptrend in acquisition pricing.
More corporations are gearing up for divestitures, and some are still open to considering the IPO market.
IPO filings are still active, even though IPOs are not.
Groupon is slated to begin its roadshow next week.
2011 is projected to be a record year for health care M&A.
The fastest growing sectors are long-term care, medical devices, hospital and pharma, and, interestingly, physician practices.
Physicians are concerned about specific risks (e.g., litigation or unclear consequences of Obamacare) and are merging in the hope of stabilizing income in coming years.
Deficit reduction may have a short-term negative effect on deal flow, because of a decrease in available cash in the economy and because of unclear tax consequences.
The 2012 elections also create uncertainty.