Three M&A deals valued companies over a billion dollars last week: Blackhawk Network Holdings, Spectrum Brands’ battery segment, and La Quinta’s hotel segment all fetched valuations of roughly $2 billion or more.
Last week was a quiet week for IPOs. Security company ADT Corp. highlighted the week with a $1.7 billion offering. Speculation continues among other tech-based companies such as SurveyMonkey and Spotify.
Pitchbook released its 2017 Annual US PE Breakdown report this week. The total value of private equity (PE) deals completed in the US in 2017 was estimated at $538 billion across 4,053 deals.
This activity is down 8.9% from 2016, which is a bit counterintuitive at first since PE funds have record amounts of “dry powder” to invest. Three quarters of the follow-on funds raised by private equity funds during the year were larger than their predecessor funds. PitchBook’s recent 2018 Crystal Ball Survey report found that private equity firms had two main concerns. The first was a perceived “high-priced” environment, with the median EBITDA (earnings before interest taxes depreciation and amortization) in 2017 coming in at 10.5x. The second was a perceived lack of “quality” targets being on the market after the record volume of deals over the last several years.
Of the six notable mergers and acquisition (M&A) transactions highlighted this week, the spin off of Altice USA from its European parent and the acquisition of Midwest-based DST Systems were the largest transactions.
The general tone of economic data released last week signals increasing confidence among both consumers and businesses.
The list of initial public offerings (IPOs) completed last week includes two “blank check” companies. These entities typically raise a pool of capital to acquire a yet-to-be determined business or group of businesses, often within a specified industry.
The Department of Labor issued its jobs report for December today, noting that employers added 148,000 non-farm jobs last month, but the unemployment rate stagnated at 4.1%. Employment gains were largely in healthcare, construction, and manufacturing.
Total construction spending increased 0.8% from October to November, reaching $1.257 trillion, according to the Commerce Department. The record high was driven by investment in private residential and non-residential projects, as total private construction increased from the prior month by 1.0%.
As the overall economy grew for the 103rd consecutive month, US manufacturing expanded at the fastest pace in three months. The 2017 average of the survey-based index was 57.6 – the best in 13 years.
Major economic news announcements during the month of December 2017 included: