Private equity activity, in line with M&A spending, made a sudden upward spike in October, climbing 137% from September and 228% from October 2017 to $68.8 billion, the highest monthly level in 2017 and 2018, as shown by preliminary data supplied by Pitchbook. Like M&A activity, the jump in private equity spending appears to have been driven by 17 deals worth over $1 billion, which accounted for $58.6 billion, 85.2% of the monthly total.
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.
In October, the U.S. Bureau of Economic Analysis released their third quarter gross domestic product report, showing the economy grew at a 3.5% annual rate, faster than the 3.4% expected rate. The growth comes on the heels of strong consumer spending of 4.0% and low inflation of 1.6%, as provided by the Personal Consumption Expenditures (PCE) price index. The report comes out as concerns continue to escalate regarding rising interest rates and tightening trade restrictions.
Total announced dollars spent on mergers and acquisitions activity spiked suddenly last month, reaching the second-highest mark for the calendar year on the back of a few mega-deals. Corporations and buyout firms announced total acquisition expenditures of $293.6 billion on 873 deals, a 272.0% increase from one year prior and a 218.1% spike from September, per preliminary data supplied by Pitchbook. The spike may be attributed to a high concentration of deals for more than $1 billion. $270.7 billion, or 92.2% of capital was for ten-figure deals.
Sixteen companies went public on the Nasdaq and New York Stock Exchange in October, raising a total of $3.3 billion, or 7.5% more than the previous month. On an annualized basis, there was a 65.6% increase in capital raised from one year prior on four more IPOs.
Last week brought third quarter GDP results that narrowly beat economists’ expectations, thanks, in part, to strong annualized consumer spending and low inflation. The Personal Consumption Expenditure price index, which is used by the Fed, underperformed the Fed target in October. However, the Producer-Price Index grew 2.9% annually, driven by producer and supplier margin increases. The JOLT Survey revealed that job openings decreased slightly in September, while the economy yielded a significant net employment gain.
Last week, a total of $43.6 billion was invested in M&A markets through 79 deals. That’s over two times as many deals as last week, but for $8.8 billion less capital. Of those 79 deals, 10 were in the manufacturing sector and another 10 were for SaaS firms, with $2.25 billion and $1.8 billion invested, respectively. However, the technology, media, and telecommunications sector was the busiest again, with $35.8 billion invested across 31 deals, equaling roughly $1.15 billion per deal. The week also brought antitrust approval for Broadcom’s $19 billion acquisition of CA Technologies.
Last week’s economic news showed consumer confidence reaching a sudden 18-year high, lending hope to the possibility of continued economic expansion. Also, worker productivity grew only slightly in October, thanks in part to employers’ need to hire lower-skilled workers. On Friday, the Labor Department announced job growth far exceeded expectations, unemployment held constant, and wage growth also increased.
There were 36 M&A transactions during the week ended November 3rd, representing a total invested capital amount of $52.4 billion. The largest deal, at $34 billion, was IBM’s acquisition of Red Hat. Below are highlighted deals within Skyline’s industry focuses.
Last week, three health care companies made their Nasdaq trading debut, raising a total of $390 million in equity capital. Twist Bioscience and Axonics Modulation Technologies, both from California, along with Orchard Therapeutics from London, debuted their initial public offerings despite a volatile couple weeks in the stock market.