Hardly a Firecracker Start to July M&A

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Includes: ADP, DELL, DVMT, IBM
by: 451 Research: Inorganic Growth

By Brenon Daly

Just looking at the high-profile names that have been buyers so far this month, an observer could be forgiven for just assuming that we’re automatically going to top the record level of spending that we tallied for the second quarter. ADP, Facebook, EMC, IBM and Dell (NASDAQ:DELL) (among others) have all announced acquisitions in July, the first month of the third quarter. So M&A is back, right?

Maybe not. Although it’s still early (very early) in the third quarter, we don’t necessarily expect spending in the current quarter to eclipse the second-quarter level. In the April-June period, the value of transactions hit $62bn, more than 10% higher than any quarterly total we’ve seen since the Credit Crisis erupted two years ago. For the third quarter, we wouldn’t at all be surprised to see M&A spending slip back somewhere in the band of $30-50bn in quarterly deal flow that we’ve seen over the past two years.

Nearly halfway through July, we’re tracking to the lowest spending level in the past four months. In fact, July is shaping up to be 30-40% lower than the monthly totals from March to June. Granted, the start to July – with the long Independence Day weekend, not to mention the distraction of the World Cup – may not be representative for the full month. But it’s certainly an early indicator worth following. We’ll be looking at the current M&A market and what the rest of 2010 might hold for dealmakers in a special midyear webinar. Click here to register.

2010 activity, monthly

Month Deal volume Deal value
January 296 $5bn
February 278 $8.3bn
March 273 $17bn
April 252 $21.1bn
May 271 $20.3bn
June 260 $22.5bn
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Click to enlarge