It’s all in the name!

Everything we read in the financial press is currently telling us that there are positive signs for M&A deal-making this year. This is partly being driven by the formal announcement of four deals over USD 10bn each in February alone, along with a steady increase in private equity transactions being recorded. The four deals announced in February have involved particularly high profile target companies; HJ Heinz, NBC Universal, Virgin Media and Dell. These are firms whose names and brands reach much further than corporate boardrooms, financial wizards and sector experts, and are known to the general public around the world.

Yet when I look back at the same time period (between January 1st and February 28th) for the last five years, the reality is that 2013 so far is only the 3rd best year in terms of producing announced deals greater than USD 10bn. It was 2009 that saw 7 deals greater than USD 10bn totalling USD 169.4bn, and not surprisingly there were a couple of banking transactions in there. 2011 also recorded 7 deals over USD 10bn adding up to USD 107.2bn, then you have 2013 with our 4 deals totalling USD 92.4bn.  Interestingly, all of the big transactions announced in this window of time in each of the previous 4 years went on to full completion, again perhaps diluting the myth that large deals have become substantially harder to close.

There is no denying that the value of deals announced in the first two months of this year is a substantial improvement on the same period in 2012, with a 77.0 per cent upturn, but perhaps the biggest difference between 2013 and the previous 4 years is that the companies who are subject to these massive takeover offers are names that everyone knows. It is undoubtedly true that some very big companies have been acquired over the previous 4 years, but when you look at who they were, perhaps only a couple of them would have registered in the psyche of the broader general public.

Filed under: M&A, dealmaking