Thursday’s Headlines: Deal sums down, but numbers are up – is that good or bad?
We’ve mentioned in passing that the dollar sum of recent M&A deals have dropped in recent years, but the number of smaller deals has jumped in recent months. DealBook took a deeper look into this phenomenon in an article titled, “Two Views of This Summer’s Deal-Making.”
From June 1 to now the sum of deals totaled $191.9, the lowest volume of summertime deals since 2007. Yet there were 3,400 deals announced, the second-highest figure in five years.
Several mergers specialists, a surprisingly large number of whom were still in the office during the last week of August, say that confidence in corporate boardrooms and corner offices is rising. These bankers and lawyers cite many of the same refrains, including enormous amounts of cash on companies’ balance sheets and an acute need for growth, as primary drivers for mergers getting done. And they say that their pipelines of works in progress is still full.
New deals tend to be acquisitions of divisions (opposed to entire businesses), which is expected to continue.