Skyline Advisors has released its latest Capital Markets Review: Midwest Edition for the third quarter of 2019. The report details activity and trends for mergers and acquisitions, private equity deals, and venture capital deals for both national and Midwest geographies. Key highlights include:
Acquisition Investment is Lifted to a Two-Year High on the Back of Five Out-sized Deals
According to preliminary data from Pitchbook, there were 752 M&A deals worth a total of $240 billion in July, remaining relatively unchanged from the $237 billion spent on corporate acquisition and leveraged buyout deals in June. Over 60% of the deal value is comprised of the buyouts of five target companies: Worldpay, L3 Technologies, Red Hat, First Data, and Array BioPharma.
M&A Activity Spikes in June on the Back of Mega Deals
In June, there were 643 deals in M&A capital markets worth a combined $270 billion, the highest level since the start of the decade in 2010. However, 45% of that value is attributable to United Technologies’ blockbuster acquisition of defense contractor Raytheon. In fact, the deal is the largest since Time Warner acquired AOL in January 2001.
M&A Activity Picks Up in May Despite Weaker Year than 2018
There were 720 M&A deals valued at a combined $194 billion in May, according to Pitchbook. For the year through the end of the May, there were 3,756 deals for $906 billion capital, roughly 1,140 fewer deals and $506 billion less value for the same period in 2018.
Annual venture capital investment has hit $100 billion for the first time since the dot-com era, according to Pitchbook. Deal value in VC-led deals reached $130.9 billion, up 57.7% from 2017’s value of $83 billion. The number of financings completed, however, fell to 8,948 from 9,489. The last time venture capital investment topped $100 billion was in 2000, when investment reached $105 billion, according to data from Thomson Reuters. Pitchbook included Altria’s $12.8 billion financing of Juul in its calculation.
Based on preliminary data from Pitchbook, venture capital firms invested 6.7% more capital in October than in September, rising from $10.5 billion to $11.2 billion. However, deals were larger, as total deals counts fell by 85 to 707, a 10.7% decline. This trend of fewer deals but more invested capital has been continuing for three months now, constituting a 52.8% increase in capital per deal over the period.
According to data from Pitchbook, venture capital firms (VCs) invested a total of $8.86 billion into 768 U.S. companies in August. These numbers are down 19.3% from the $10.97 billion invested by VCs in August 2017 but are up 4.70% from the total invested capital in July 2018.
In the first quarter of 2018, 1,683 companies raised $28.2 billion in venture capital funding, according to data provider Pitchbook. The quarter marked the fourth consecutive quarter of more than $20 billion invested and the largest amount invested in a single quarter since at least 2006. Continuing the trend from 2017, more value was spread across fewer deals.
The fourth quarter of 2017 marked the third consecutive quarter with at least $20 billion invested in US venture-backed companies. Investment in 2017, as a whole, reached $84 billion, which is the first time venture investment has eclipsed $80 billion since the dot-com boom. The $84 billion was spread over 8,076 deals, reflecting a 6% drop in deal count from 2016 but a 16% improvement in total value.
There were 2,362 global venture-backed deals, representing $49 billion in value, in the third quarter of 2017, according to Preqin. While this is the sixth consecutive quarter of declining transactions, the deal value in the quarter represents the second consecutive quarter of record highs, and the value through the first three quarters of 2017, at $128 billion, is on pace to become an all-time annual high. This comes as deal count through the first three quarters of 2017 are down 14% to 7,552 announcements from 2016’s 8,792. The US accounted for 40% of global deals, both in terms of volume and value.