Mergermarket and Merrill DataSite publish Deal Drivers North America H1 2010

Deal flow in the first two quarters of 2010 suggests the North American M&A market is beginning to stabilize after years of extreme volatility.

NEW YORK, August 18, 2010 - Deal flow in the first two quarters of 2010 suggests the North American M&A market is beginning to stabilize after years of extreme volatility. Deal Drivers North America H1 2010, a comprehensive review of M&A activity across the US, Canada and Latin America, identifies strong private equity exit activity and heightened competition among strategic and financial buyers as signs of improved market sentiment. The report also cites sector-specific regulatory developments and a pipeline of lucrative deals as two of the many factors driving increased M&A through the second half of 2010.
The first half of 2010 saw 1,701 deals worth US$362.3bn, with volume remaining virtually stable against the previous half-year and value increasing by 8.7%. Private equity exit activity was particularly strong in H1 2010 with 249 exits worth a combined US$41.6bn, compared to 337 exits worth US$35bn in all of 2009.
"Our clients' earnings in general were stronger, in some cases much stronger," says Robert Winborne, Managing Director of US-based law firm Brookwood Associates. "Most importantly, however, cash flow lending revived, allowing private equity firms to return as meaningful buyers."
The TMT sector is leading M&A activity in terms of volume, generating approximately one-fifth of all deals announced in H1 2010, with technology companies' appetite for digital assets and media companies' ongoing restructuring efforts contributing heavily to deal volume during this period.
"There's an upward trend in long term optimism. Banks are in the business of lending and there are some good opportunities emerging," said Frank Arnone, Partner at Canada-based law firm Blake, Cassels & Graydon LLP.
Asset sales from AIG, Bank of America Corporation and Citigroup boosted deal volume and value in the Financial Services sector in the first two quarters, as did consolidation of community banks across the US. Regional banking M&A has continued into the third quarter, as have asset sales, spin-offs and divestitures of larger banks' non-core operations, suggesting Financial Services will see a steady rise in deal flow through H2 2010.
"We have seen the most active six months of M&A activity in recent years which leads us to believe that the remainder of 2010 will continue to be a busy year for companies looking to acquire or sell," said Richard A. Martin Jr. Senior Director of Merrill DataSite®.
The report, available for download here, provides an in-depth analysis of M&A activity in North America during H1 2010, as well as sector-specific predictions for H2 2010.
Other key highlights from the report include:
• Dealmaking in the Energy, Mining, Oil & Gas sector has been extensive, representing approximately one-third of aggregate deal value in H1 2010. The Energy sector features a strong pipeline of deals with the influx of Asian buyers into Canada and the aftermath of the Gulf of Mexico oil spill serving as key drivers.
• Private equity buyout activity is positioned for an increase, with 275 deals worth US$37.1bn in H1 2010 against 474 deals worth US$50.1bn in all of 2009.
• Goldman Sachs tops the league tables as the most active financial advisor of the half-year in terms of both volume and value, working on 89 transactions worth US$142.3bn. Simpson Thacher & Bartlett and DLA Piper were the most active legal advisors in terms of value and volume, respectively.
The full report is available for download here.
Please find below an illustration of expected M&A activity for H2 2010 broken down into sectors, as well as a breakdown of top 20 deals announced in H1 2010.
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