Mergers and acquisitions and private equity are two forms of business activity that tends to tell the overall business environment and business’s confidence in the economy. When M&A activity or private equity deals heat up, it means that corporate America generally has a positive economic outlook and is great for economic growth. However, when these types of deals and financing start to show a trend change to the downside, some fret that it could possibly mean that economic activity could be turbulent in the coming months. Unfortunately, we saw M&A and private equity activity fall significantly last month during April. Mergers & acquisitions activity in the US fell 6.2% in April, while private equity skid 17% during April.
Activity and dollar amount spent on M&A deals both down sharply last month
From January to March 2015, we consistently saw decent number of deals and dollar amount in mergers and acquisition deals saw consistent month over month growth. In January 2015, there were 1,021 merger and acquisition deals, deals fell to 960 in February 2015, but rebounded to 1019 in March 2015. However, aggregate deal value consistently rose over that period, showing the bullishness in US business environment. However, in April, the number of deals slid to 956 and spending was 31.2% less than it was last month. The top 3 sectors that saw a biggest increase in M&A deals and value were Technology Services (519 deals), Finance (392) and Consumer Services (236). The top 3 worst M&A sector performances belong to Utilities (35), Producer Manufacturing (169), and Commercial Services (467).
Carlson Capital's Black Diamond Arbitrage Partners fund added 1.3% net fees in the first quarter of 2021, according to a copy of the firm's March 2021 investor update, which ValueWalk has been able to review. Q1 2021 hedge fund letters, conferences and more At the end of the quarter, merger arbitrage investments represented 89% of Read More
Private equity activity falls 17% last month, aggregate dollar value down over 19%
April was a rough month for private equity firms as well. During last month, only 88 private equity deals were made, compared to 106 in March. Aggregate dollar values decreased 19.7% to an average of $20.4 billion, down from March’s value of $25.4 billion. Canadian businesses were most active in US private equity deals during the month with 22 deals with US companies. Thus far into 2015, the largest US deal to take over a foreign corporation was made by FedEx Corp. when they announced they will be acquiring TNT Express NV, a Netherlands- based company, for $4.8 billion.
Overall, M&A activity and private equity has been strong up until this point in 2015. The first several months brought a consistent range of deals and a consistent growth in aggregate deal values. However, the recent drop off in activity is somewhat worrisome, because it suggests that businesses are not as confident about the economic outlook as they were last month. While this poses a problem, we will have to wait for results to come out for the current month to determine whether a new downtrend is forming.