Is deal flow really down?
The media has been talking quite a bit lately (see here and here) about the decrease in corporate takeovers in 2016. Furthermore, there has been much discussion about the implications on the companies that are most dependent on strong deal flow (see here). All of this led me to wonder… how much of this chatter is true? I took at a look at recent mergers and acquisitions data to find out:
Looking at the number of completed deals over the past three years, we can see that yes, deal flow has slowed over the past few months. It is clear that the number of deals has gone down since last December, and that each of the months this year is slower than the same month a year ago. Each month this year has also been below the average level (over the past three years).
A slightly different picture emerges, however, when we look at the cumulative size of the deals. On the one hand the market saw high levels last November and December, as well as in June and July. Compared to 2015, however, three of 2016’s first four months have had higher cumulative deal sizes than the same month a year ago. In all, the M&A data paints a murkier picture than what has been presented in the news. While the number of deals is down, the cumulative value of the deals has not decreased, indicating that the deals being completed are larger in dollar value.