One important week to go to the end of Q3

At the end of today we have one full week remaining of Q3 2011 and it’s going to have to be a good one if 2011 is to get back on the deal track!

As of this morning, global announced M&A for Q3 2011 stood at $683.9bn, which is some 20 per cent lower than Q2 2011 and a not dissimilar amount down in percentage terms on the comparable quarter in 2010. If next week doesn’t see some of the big deals announced that are being spoken about as being in the “pipeline” by investment banks and advisors alike, then Q3 2011 could well end up as the third successive decreasing quarter for global announced M&A activity.

We last experienced three consecutive quarters of decreasing deal activity between Q3 2007 and Q2 2008, and it is very easy to see other economic comparables from that time. Economic uncertainty exists in the equity markets, the eurozone debt crisis continues to be unresolved and faltering economic growth seems to be spreading on a daily basis, all of which bear an uncanny resemblance to late 2007 and most of 2008.

It is apparent that many corporates have cash available for deals, and many private equity firms are still sitting on funds raised that have not yet been invested. However, the market is a nervous one at this point in time, and as a friend of mine from the City said to me on Wednesday, “even the City isn’t quite sure which way things will go at the moment”. So I suspect the deal floodgates won’t open next week for the usual Q4 rush.

Filed under: economy, M&A, dealmaking