M&A Activity on the Upswing

Dealflow and aggregate deal value numbers for both the US and European merger and acquisitions (M&A) markets are on the rise in 2004, according to the latest numbers from Mergerstat LLC. In the US, dealflow reached 7,419 net new announcements through September 29, eclipsing the 6,200 net new announcements reported for the same time period last year. Aggregate deal value also saw a huge bump this year, soaring to $530.2 billion from $312.4 billion in the same period last year.

According to the report, there’s a good chance that US dealflow will shoot past the full year numbers of 2003. There were 8,497 transactions in all of 2003, which means that the US M&A market needs to announce at least 1,078 transactions in the 4th quarter to keep up with 2003. That appears to be likely given that, so far in 2004, the quarterly average for deal announcements in 2004 is 2,473.

“Clearly, the US M&A market is enjoying a healthy deal environment…”

                                                Mergerstat, October 2004

What US industries have been driving this run-up in M&A activity? According to Mergerstat, the top five US industries in 2004 have been Computer Software, Supplies & Services; Leisure & Entertainment; Broadcasting; Communications; and Printing & Publishing. The ranking is based on the increase in deal activity relative to the industry’s performance in 2003 through September 29.

The number one industry on the list is Computer Software, Supplies & Services, which has logged a whopping 1,201 announcements this year, 233 more transactions than in 2003 through September 29. Leisure & Entertainment has placed second with 380 new announcements, a jump of 158 deals over last year’s total through September 29.

Broadcasting has chimed in with 415 transactions, 121 more deals than the same period in 2003. Communications has notched 256 deals, 95 acquisitions above what it did in 2003 through September 29. And, finally, Printing & Publishing has posted 211 new deals, which nets out to an increase of 60 transactions over 2003’s total of 151 new deals through September 29.

Dealmakers in the US aren’t the only ones putting up some impressive numbers. Overall dealflow for European M&A has risen to 6,801 this year compared to 6,091 last year through September 29. Aggregate deal value has also swelled, expanding to $317.5 billion from $298.4 billion in 2003 for the same time period.

One major reason for this jump in European dealflow can be attributed to the big upswing in announcements of private deals without price tags, which typically account for the majority of activity in both the US and Europe. So far this year, there have been 4,864 announcements of these kinds of deals, an improvement of 818 announcements over the same time period in 2003.

The top industries driving the Europe M&A market have been somewhat different than the ones driving the US M&A market. In Europe, the industries that showed the greatest increase in dealflow this year versus last year through September 29 were Computer Software, Supplies & Services; Leisure & Entertainment; Construction Contractors & Engineering Services; Industrial & Farm Equipment & Machinery; and Transportation.