Number of Deals Dips, but Their Value Soars 39%

10.06.2011
The number of announced U.S. mergers and acquisitions may have slipped by 4% in the first five months this year, but an increase in monster deals boosted total M&A value by 39% -- to $454 billion.

The latest PwC U.S. tally of deals continued the trend toward the higher value of deal-making, it said, noting that no end to the increases is in sight. It cited stronger capital markets, more available financing, and hefty cash positions among public companies and private-equity institutions.

"An increase in total deal value in the last twelve months ending May 2011 indicates a sustained M&A cycle, and as confidence continues to build, markets stabilize and businesses look towards growth, we expect the acceleration of the M&A market to continue in the second half of 2011," according to Martyn Curragh, PwC's U.S. Transaction Services Leader.

The report said that 1,276 transactions were announced in the first five months of the year, down from 1,336 a year earlier. Part of the reason for the slippage in volume reflected a lag time in the reporting of deals, according to PwC. But the "competitive deal landscape and improved business confidence" among buyers helped lead to an average 45% rise in deal size, to $356 million from $245 million -- and a total valuation of $454 billion, up from $327 billion.

Bolstering PwC's explanation about the role of strong corporate cash positions in the M&A trend was a Factset report on S&P 500 company balance sheets showing that cash exceeds $1.1 trillion.