November M&A slumps in United States - Dealogic

November 29 - Reuters - The value of announced U.S. mergers and acquisitions fell 71 percent in November to $58.1 billion when compared to the same month last year, according to research firm Dealogic.

In November of 2006, M&A had reached $200 billion.

As lending markets remained tight and investment banks absorbed the fallout from mortgage losses, the M&A slowdown in the United States that started in August showed few signs of reversing course this month. Read More.

Financial sector M&A

November 29 - Financial Times - Even Dick Cheney could not have missed. E-Trade looked like a sitting duck for a takeover by one its rivals TD Ameritrade and Charles Schwab. E-Trade’s shares have fallen almost 80 per cent since June and the online broker needed fresh capital. Meanwhile, consolidation has long made sense in that sector, given the huge cost savings on offer.

So why did neither pull the trigger, allowing hedge fund Citadel to swoop in and take a dominant stake instead? And why have other financial companies not rushed in to take advantage of their rivals’ distress through acquisitions? Read More.

Dealwatch: Cleantech

November 28 - Dealscape Blog (The Deal) - Cleantech venture investing has hit a record high in 2007, according to data out Nov. 28 from Thomson Financial and the National Venture Capital Association, as U.S. venture firms poured $2.6 billion into 168 cleantech deals in the first nine months of the year. The year-to-date total is already 46% more by dollar volume than all of 2006 and the highest dollar volume ever, the report said.

While the three largest cleantech deals by U.S. firms in the first three quarters of 2007 were in overseas companies, California, Massachusetts and Texas unsurprisingly roped in the most dollars and deals stateside, while solar energy saw the most activity by subsector. The largest funding for a U.S. company, the report said, came in two rounds totaling $115 million for GreatPoint Energy Inc. of Cambridge, Mass., which converts coals, petroleum coke and biomass into clean natural gas, from Citigroup Inc.'s Sustainable Development Investments unit, AES Corp., Suncor Energy Inc., Kleiner Perkins Caufield & Byers, Draper Fisher Jurvetson, Dow Chemical Co., Advanced Technology Ventures, Khosla Ventures and others. The most active U.S. investors this year have been Khosla, DFJ and Kleiner Perkins, the report said. Read More.

Climate change inspires thoughts of M&A

November 28 - Financial News (U.S.) - Climate-change concerns may set off a wave of mergers as a survey found that 20% of companies have considered buying a business to cope with the greater focus on alternative energy.

UK law firm Clifford Chance surveyed over 100 top executives at mostly multinational companies based in the US, UK, Europe and Asia about climate change issues.

The survey found that 44% of the Asian companies had considered buying another business, in areas like wind farms. About 19% of companies in the US and UK had made similar plans, along with about 13% of the companies in mainland Europe. Read More.

Investors switch from megadeals to mid-market

November 27 - Financial News - Investors in private equity funds are recruiting specialists to target mid-market dealmakers. Sentiment is swinging away from mega-buyout firms on fears the golden era of cheap debt and rising company profits is over.

Bregal Investments, a company that acts as a Swiss family office for the Dutch Brenninkmeijer family, billionaire owners of European clothing retailer C&A Group, has hired Alex Murray from boutique advisory firm Hawkpoint to help it co-invest in the mid-market. The boutique helped arrange Kohlberg Kravis Roberts’ $3.8bn (€2.6bn) takeover of Laureate Education.

The hiring of Murray comes after US-based investment office Private Advisors hired Jens Bisgaard-Frantzen from the mid-market private equity investment team at ATP, Denmark’s largest pension fund. Read More.

Providing a clearer path forward for private equity

The industry needs greater regulation and disclosure, but new rules should not scare it away from Britain

I was former chairman of Morgan Stanley International, I was the former regulator, the precursor of the FSA in the City, and a number of other roles. I was asked by the Venture Capital Association, which is the industry association for private equity in the UK, and by a group of major buyout firms to undertake an independent review into the degree of openness of private equity, which had come in for a lot of criticism. The scrutiny of private equity at the big buyout end had intensified greatly when they were pitching to buy Sainsbury’s, which in the event was a transaction that did not happen, and also to buy Alliance Boots. There was seen to be a lot of movement in their acquisition of listed companies that were being taken private and an acute sense that private equity is very secretive and the public just didn’t know enough about what was going on. That sense of uncertainty and ignorance led to a lot of suspicion. I have to say I think a lot of that was wholly justified, so there was disquiet that had to be addressed. Read More.

If Buyout Firms Are So Smart, Why Are They So Wrong?

ENOUGH already.

Private equity firms have recently been reneging on their billion-dollar buyouts as if the deals came with a 30-day money-back guarantee. They don’t. But that hasn’t stopped the biggest firms from trying to bully — yes, let’s finally call it what it is — their way out of deals.

For the last few months, private equity firms have repeatedly broken their word when breaking a deal, trying to place blame on big, bad investment banks that they said were holding them hostage by threatening to withdraw financing.

It was an easy narrative to follow, but it obscured the truth: Private equity firms, widely hailed as the “smart money,” made some lousy deals in the second half of this year, and some are now having a bad case of buyer’s remorse. They have been more than happy to break the deals and let the banks be the fall guys. Read More.

US dominates UK cross border M&A, as global levels show surprising resilience to credit crunch

November 14 - Business Credit Management (U.K.) - Despite the United States sub-prime loan crisis, US firms continues to acquire more UK companies than any other nation as UK M&A activity defied expectations with a robust third quarter, according to new research from Grant Thornton Corporate Finance.

In Q3 2007, both foreign acquisitions in the UK and UK acquisitions abroad were of greater value than during the same period last year, with UK companies reporting their highest third quarter offshore M&A spend since 2000. Meanwhile domestic M&A also held firm, dropping just 4% in volume on the same period in 2007 despite fears of a significant downturn due to the present perceived illiquidity in the market.

David Brooks, Head of M&A at Grant Thornton Corporate Finance, said the US was still the central driver of UK cross border M&A, with £26.7 billion spent by UK companies on US businesses and an almost equal amount spent in the opposite direction during the first nine months of 2007. Read More.

Canada's M&A activity seen strong for rest of year

November 13 - Reuters - Mergers and acquisitions in Canada stayed buoyant in the third quarter, data showed on Tuesday, and should remain so for the rest of the year, driven by strategic buyers but also the resurgence of private equity groups.

Canadian companies announced transactions worth C$91 billion ($95 billion) in the third quarter, according to data compiled by Toronto niche investment bank Crosbie & Co. and the Financial Post newspaper.

That's the second-highest quarter on record in terms of value and was largely driven by the announcement of aluminum producer Alcan Inc's US$38.1 billion purchase by Anglo-Australian metals giant Rio Tinto. Read More.

Podcast: M&A Outlook 2008, Three Hot Sectors

November 8 - PodTech - M&A deals in energy, real estate, and health care are some examples of sectors that still show lots opportunity, with some caution. Jason Lopez spoke with experts in each of these sectors at The Deal's "M&A Outlook 2008." In this podcast you'll hear about the nuances of the markets and expectations for next year from two energy pros, Jamie Welch, head of Global Energy for Credit Suisse and Richard Vaccari, VP of mergers and acquisitions at Sempra Energy. Listen to podcast.

More start-ups choosing mergers over IPOs

November 10 - San Jose Mercury - Tell us, Mike McCue. Why did you sell Tellme to Microsoft instead of opting for a dramatic Wall Street debut? Don't you listen to the venture capitalists? Don't you know that Silicon Valley dares to dream big?

But dreaming big, McCue says, is precisely why Mountain View-based Tellme became a Microsoft subsidiary in May for an undisclosed price some reports put at $800 million to $1 billion. Passing up an initial public offering, or IPO, to join Microsoft amid the "smartphone" revolution, he says, is a pivotal step toward fulfilling the grand vision that inspired Tellme in 1999: to make getting information from the Internet as easy as speaking into a phone.

"Life is too short to do something small," says McCue, who at 40 is part of a generation of entrepreneurs who started out as the Internet age was dawning. In the Microsoft deal, "we saw the intersection to create something absolutely huge - serving not just millions of people, but billions." Read More.

M&A Outlook 2008: The credit crunch's impact on the middle market

November 7 - Dealspace Blog (The Deal) - A panel at The Deal's M&A Outlook 2008 conference at the Ritz-Carlton, Battery Park in New York City Wednesday moderated by The Deal senior editor Vyvyan Tenorio weighed in on the impact of the credit crunch on the middle market, what it's done to growth and cyclical deals, and the resilience and volume of the middle market.

The panelists Steven Dresner, president of Dresner Partners; Michael J. Lyons, senior managing director at Lincolnshire Management Inc.; Robin Marshall, a partner at 3i Group plc; and Adam D. Sokoloff, managing director and head of financial sponsors and private capital group for Jefferies & Co.; generally agreed that turmoil in the credit markets hasn't hit the middle market as hard as it has the larger private equity deals.

"In August when things started turning, there was a slight change as some of the lenders were ratcheting things down, but other than that we haven't seen major changes in the debt markets [for middle market deals]. The middle market remains very fluid, and our firm is still very busy," said Lincolnshire's Lyons. "The middle market never got to the very high multiples seen in the larger buyout market, where multiples reaches 8 times or 9 times Ebitda. The middle market never really got past 7 times Ebitda." Read More.

M&A Outlook 2008: Cross-border bonanza

November 7 - Dealscape Blog (The Deal) - Mohr offered some color on trends. This year, she said, really represents the high-water mark of where M&A is globally. Overseas is where the growth lies. In 2007 to date, she said 45% of global M&A has been cross-border. It should be somewhere in the high 40% range by the end of the year. While Europe and U.S. have historically driven this, growth in the rest of the world has almost doubled over recent years. In the second quarter of 2007, there was $800 billion in global M&A volume. In the third quarter, it dropped to $400 million. The fallout largely came from the U.S. and Europe, she said, while volume from the rest of the world was essentially flat. The role of emerging markets and their companion sovereign wealth funds are driving a lot of this. Sectors where activity is hot include: financial services, energy and power, and industrials.

For buyers looking to the U.S., the current climate may make M&A prospects more attractive. Because of the credit crunch and the depressed U.S. dollar, cross-border strategics may see this as a good time to invest in the U.S., Hartman said. Read More.

M&A Outlook 2008: Energy sector

M&A Outlook 2008: Energy sector

With winter just around the corner and oil surging toward $100 a barrel, the energy sector has been on the minds of consumers as wells as dealmakers lately. A panel of dealmakers gathered Wednesday at The Deal's M&A Outlook 2008 conference at the Ritz-Carlton Hotel Battery Park in New York City to discuss the M&A opportunities in the sector. The general sentiment of the three panelists, Richard A. Vaccari, vice president, mergers and acquisitions at Sempra Energy; Douglas Korn, senior managing director and executive VP at Bear Stearns Merchant Banking; and Jamie Welch, head of global energy, investment banking division, at Credit Suisse Securities (USA) LLC, is that the outlook for energy deals will remain bullish.

Mohr offered some color on trends. This year, she said, really represents the high-water mark of where M&A is globally. Overseas is where the growth lies. In 2007 to date, she said 45% of global M&A has been cross-border. It should be somewhere in the high 40% range by the end of the year. While Europe and U.S. have historically driven this, growth in the rest of the world has almost doubled over recent years. In the second quarter of 2007, there was $800 billion in global M&A volume. In the third quarter, it dropped to $400 million. The fallout largely came from the U.S. and Europe, she said, while volume from the rest of the world was essentially flat. The role of emerging markets and their companion sovereign wealth funds are driving a lot of this. Sectors where activity is hot include: financial services, energy and power, and industrials. Read More.

Financial firms seen boosting M&A

November 7 - Reuters - While the market for mergers and acquisitions has slowed in recent months due to a credit crunch, financial services firms are expected to seek more opportunistic acquisitions, senior executives predicted at this week's Reuters Finance Summit.

Among the likely moves will be well-capitalized Asian banks looking to buy stakes in U.S. and European financial services markets through acquisitions, executives said.

And European institutions may extend their reach into the U.S. market after assets get cheaper from a falling dollar, they said. Read More.

Private equity poised for a comeback

November 6 - Washington Technology - The recent subprime credit woes brought an end to the third era of private equity, but the fourth era should begin in early 2008, according to David Rubenstein of the Carlyle Group.

Rubenstein is one of the founders of the private equity group, which has focused heavily on deals in the government market.

In a speech liberally sprinkled with self-deprecating humor, Rubenstein explained that private equity deals will return. “They will come back because investors know the returns are better than they can find anywhere else,” he said. Rubenstein was the keynote speaker at the annual Northern Virginia Technology Council annual banquet Nov. 5. Read More.

M&A Outlook 2008: Energy & Healthcare

M&A Outlook 2008: Energy spotlight

Energy has long been one of the largest concerns of the global economy, and with oil prices soaring, unrest in the Middle East and the rise of China, the importance of M&A among energy companies is likely to increase in importance in 2008. Read More.

M&A Outlook 2008: Healthcare spotlight

During the first three quarters of 2007, a total of 722 deals were announced in the healthcare industry worth a combined total of $173 billion, according to investment researcher Irving Levin Associates Inc. The firm notes it now seems unlikely that this year's dollar amount will surpass the record-breaking $267.1 billion reached in 2006. Read More.

India the New Hot Spot for Global Private Equity

November 3 - The India Street - Thanks to increasing consumer market and economic boom in India, the action in private equity space is increasing with every passing day. Therefore, I was not at all surprised when one of my colleagues said to me that private equity funds are queuing up to enter India (By the way, another source for private equity news that we subscribe to is the VC Circle).

Point to be noted here is that Blackstone India and Apax Partners, which started investing in India this year, already have full-fledged offices here. Same is the case with Baird Private Equity and Lehman Brothers. What’s more, Deloitte Touche Tohmatsu India has also set up a dedicated private equity practice called Deloitte Corporate Finance Services India. Read More.

Is Tech Ready to Go Deal-Crazy?

October 31 - Motley Fool - Over the past couple of months, tech companies such as SAP, McAfee, Microsoft, and Oracle have made some interesting headline M&A deals. Is this the start of a major trend? It may be. This is according to a tech research firm, The 451 Group.

First, let's get some background. The 451 Group reports that private equity tech deals surged 138% this year to $183.7 billion. Strategic deal making, on the other hand, plunged 31% to $212.4 billion. A strategic deal is when a company buys another firm in the same industry. Read More.