Goldman Sachs points out that last week was the best week since mid-July for M&A announcements, as the total touched $150 billion aided by a few large deals.
Alexander Blostein and team at Goldman Sachs in their weekly review report dated November 21, 2014 highlight that M&A re-accelerated last week, though trading volume witnessed a modest deceleration.
M&A activities re-accelerate
Tracking the weekly activities between November 14, 2014 and November 20, 2014, the Goldman Sachs analysts note that M&A activity levels have accelerated in November, keeping the backlog near record levels.
As can be deduced from the following graph, M&A announcements clocked in at $150 billion last week, aided by a few large deals:
The Goldman Sachs analysts point out that in issuance, DCM spiked 18% wow thanks to strong Non-US and HY issuance.
The following table sets forth how ECM declined 7% wow thanks to lighter IPO activity, though follow-ons and converts remained very active:
M&A announcements: Action in energy market
Blostein et al. of Goldman Sachs note both equity and rates markets were largely unchanged last week, with S&P 500 posting a modest 0.7% gain, outperforming MSCI EM which declined 0.3%. However, the analysts highlight that despite volumes across most asset classes continuing to subside, energy was an exception.
As can be deduced from the following table, natural gas prices leaped 13% wow, with a 30% jump in volatility. Moreover, oil prices increased 2.4% wow, with the Brent-WTI spread narrowing further around to $3.5, which is the tightest seen since May 2011:
Turning their focus to exchange volumes, the analysts highlight exchange volumes continued to soften across most categories. As seen in the following table, equity trading was mixed with US cash equity ADV down marginally by 2% wow. Moreover, at CME, rates were the only bright spot with ADV up 20% wow with overall volumes up by just 4% wow.
The GS analysts point out that both Evercore Partners Inc. (NYSE:EVR) and MC provide a favorable outlook into 2015 M&A as echoed at the GS SMID Cap Growth Conference last week. The analysts note this suggests deal flow will exhibit further strength. Pointing to the constructive outlook painted by the CEOs of both EVR and MC at the conference, they note the current M&A cycle has lots of room to go.
Blostein et al. also note that although 2014 has been dominated by large-scale transactions, the CEOs of both Evercore Partners Inc. (NYSE:EVR) and MC anticipate smaller, but still significant, deals in the sub-$5 billion range to accelerate next year. Finally, the analysts point out there are signs of financial sponsors becoming more active in capital deployment as larger portions of prior vintages have now been realized, which could be a tailwind for M&A in 2015.