Positive M&A Momentum in H2/13 to Carry into 2014, PwC Finds
Strong momentum in the merger and acquisition (M&A) market during the second half of 2013 is expected to continue into 2014, according to PwC US. Improved stability and early signs of growth in other key global markets have contributed to an increasing level of business confidence and sharpening focus on finding opportunities for growth, setting the stage for positive M&A momentum, according to PwC’s year-end M&A outlook.
PwC notes that the average monthly deal volume continued to pick up through the latter part of 2013. According to data compiled by Thomson Reuters and analyzed by PwC, average monthly deal volume increased by 10% from 808 deals per month in the first six months of 2013 to 886 deals per month from July through November.
“The improved macroeconomic environment and solid fundamentals for deal making in the U.S. that have been in place over the past two years have increased the level of business confidence in the market, fostering continued M&A activity in 2013,” said Martyn Curragh, PwC’s U.S. deals leader. “Dealmakers have also looked to opportunities in the debt market to recapitalize and monetize existing investments, demonstrating the importance of evaluating the range of scenarios available today. Given our pipeline of deals and today’s strong debt and equity markets, which help fuel divestitures and exits, we expect that M&A momentum to continue into next year.”
Through the first 11 months of 2013, there were a total of 9,280 transactions representing $944 billion in disclosed deal value. The first quarter of 2013 started off strongly, largely as a result of several “transformative” deals (transactions worth more than $5 billion) in February. In that month alone, 695 deals for a total value of $152 billion were announced, the highest since October 2011. Transformative deals accounted for 35% of total disclosed deal value in 2013, up from 24 percent last year.
“While transformative deals present businesses with great upside potential, they also carry greater risks and uncertainty due to the size and complexity of the transaction,” said Curragh. “With this uptick in transformative deals, our clients are focused on navigating potential pitfalls by addressing the long-term fundamentals of the business, allowing them to go deeper and broader in their deal assessments.”
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