2011 - H1 - does one swallow make a summer?

If you were only to measure global M&A activity by news headlines, then the first half of 2011 would lead you to believe that everything is very rosy in the M&A garden.

In the first half of the year there have been some high profile acquisitions or IPOs involving household names. Some of the more high profile deals announced include the takeover of luxury accessories company Hermes, the acquisition of Skye and the ongoing battle for the New York Stock Exchange. This is before we even get to mentioning the IPOs of LinkedIn and Glencore International.

Yet when we look at global deal value and volume the picture is a little different. Deal values as at the 27th June for the first half of the year were around the $1.72bn mark, slightly down on the second half of 2010, but by the time we reach the end of the first half I would expect this figure to have surpassed H2 of 2010 - just.

H1 2011 would be the third half of deal values showing an absolute increase, and whilst still not near pre-2008 levels, the figures are at least going in the right direction. However, deal volumes are down yet again on the previous period with only 27,119 deals being announced in the first half of the year. Apart from a slight spike in the second half of 2009, deal numbers have been on the downward slope since the first half of 2007.

So what's driving the increase in deal value?

Well, the PE guys have been busy, they have funds to spend and portfolio companies to "flip" and exit. Align this with the significant cash reserves that many global corporates have stock piled and for the right "assets" the battle lines have been drawn.

But as we say in the UK, one swallow doesn't make a summer, so the second half of the year will again be a good indicator as to how far round the corner the M&A market has turned.
 

Filed under: exit, IPOs, M&A, PE, takeover, dealmaking