North American M&A volume the lowest since 2009, value struggles year-on-year

North American PE and VC investment up, boosted by six deals worth more than USD 1bn

Mergers and acquisitions (M&A) targeting North American companies remained lacklustre in October as volume fell back once again, according to information collected by Bureau van Dijk, a Moody’s Analytics company, and the leading publisher of company information. The 1,406 deals announced over the four weeks under review not only represents a new 12-month low but also a nadir not recorded since November 2009. By contrast, M&A value marginally reversed a slump that had started in July, as month-on-month growth recorded for the US (September: USD 90,004 million; October: USD 108,898 million) drove overall North American dealmaking from USD 95,145 million in September to USD 113,236 million in October.

Bureau van Dijk’s research shows that the largest deal announced in October, which targets a company based in North America, is International Business Machine’s (IBM’s) decision to acquire open source cloud software developer Red Hat for USD 34,000 million. The purchase includes debt and represents the technology giant’s biggest purchase on record. It is more than double the month’s second-largest M&A deal by value, which is a gamechanger for the US’s defence industry: the acquisition of L3 Technologies by Harris for USD 15,704 million will create the sixth-biggest defence company in the US.

Bureau van Dijk’s data shows that the value of private equity and venture capital (PE and VC) investment in companies based in North America followed a similar pattern to M&A and increased 15 per cent to USD 21,981 million in October from USD 19,197 million in September. Volume also improved 7 per cent over the four weeks under review to 1,124 deals from 1,047 deals in September. The increase can largely be attributable to six deals that were each worth USD 1,000 million, or more, and together accounted for 43 per cent of total PE and VC value. Thoma Bravo featured in the largest North American PE and VC deal in October as it paid USD 2,100 million for US-based data and application security software provider Imperva.

Lisa Wright, director at Bureau van Dijk, commented, “While volume took a slight tumble in October, value improved across the board, suggesting appetite for deals in North America remains robust as we head further into Q4 and closer to the year-end. IBM announcing its largest ever purchase significantly helped to push value during the four weeks, in addition to the strong return of PE and VC value in the region after taking in a slight hit in September to a new 12-month low. If dealmaking continues to improve in the last two months of the calendar year, 2018 could prove to be a significant year for M&A in North America.”

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