Supported by a more “open” economy and record fiscal stimulus, the economy rebounded sharply in the third quarter, and investing activity followed suit. The aggregate value of venture capital (VC) investment increased 11% year over year in the third quarter of 2020 to reach $38 billion. And we’re seeing similar trends in private equity (PE) with year-to-date investments trending 7% higher than the same periods of 2019.
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US mergers and acquisitions (M&A) activity bounced back in the third quarter after a steep decline in the second quarter. During the quarter, an estimated 2,450 deals were completed, accounting for an estimated $344 billion. While still below pre-pandemic levels, these represented increases of 25% and 12%, respectively from the second quarter. However, on a regional basis, activity in the Midwest region reached the lowest quarterly levels in at least seven years.
The economy roared back in the third quarter, thanks to an “open” economy and record Government stimulus. Advanced estimates of the quarter’s GDP reached 33.1%, approximately twice the previous record. However, the output of the US economy still trails pre-pandemic levels, and there remains considerable uncertainty: Congress failed to pass additional stimulus in the third quarter and may not do so in 2020, and COVID-19 cases are reaching new highs that could cause more “closing” of the economy.
Though deal volume was relatively unchanged in October, overall consideration spent on acquisitions ballooned during the month, climbing approximately 194% from September to $115 billion in October. Four deals amounted to over $10 billion: the acquisitions of TD Ameritrade ($22 billion), Immunomedics ($21 billion), E*Trade ($13 billion), and Noble Energy ($13 billion).