Monday, January 6, 2014

No growth in global M&A activity in 2013

2013 saw the first annual decline in global mergers and acquisitions (M&A) activity since the financial crisis. Mergermarket notes that in spite of historically low volume of "lapsed bids" (deal proposals that didn't go through) and the massive Verizon Wireless transaction, M&A growth just hadn't materialized.
Mergermarket:- [2013 ended] as the third static year for deal value, down 3.2% at US$ 2,215.1bn compared to US$ 2,288.8bn in 2012. 2013 has been the slowest year since 2010 (US$ 2,089.6bn). Mega-deals totalling US$ 397.9bn, Verizon’s US$ 124.1bn deal value, a US recovery and the lowest number of lapsed bids on record, have failed to spur on significant growth.
Source: Mergermarket

A major headwind for M&A has been the decline in private equity exits (see example), which was down 9% in 2013. This is in spite of a fairly vibrant IPO market (see story). When private equity firms have trouble "harvesting" their portfolios, there is less "recycled" institutional capital available for new transactions (including new commitments to private equity funds).

In dollar terms, the biggest M&A increase was in Telecommunications, Media and Technology (TMT) - driven of course by Verizon and a few tech deals, particularly within the cloud computing/SaaS space. The largest decrease was in the energy/mining sector, as natural resources demand from China weakened and commodities came under pressure (see post).

Source: Mergermarket
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