Week in Review: M&A, LBOs, and the Election

Last week there was a lot of discussion about the future of M&A. With Thomson Reuters reporting a decreased year-over-year investment volume for Q3, concerns for the future have mounted; some are hopeful that November’s election will offer some revitalization while others are looking for increased corporate M&A to aid the PE shops. For the less optimistic, it is simply a waiting game – hanging on to the hope that confidence will return. Maybe the spike in LBOs, up 96 percent from last year, can restart growth in Q4.

Check the articles out below:

M&A May Recover After Election: Looks like an M&A recovery may be just around the corner. According to Jimmy Lee, Vice Chairman of JPMorgan, the November election may help alleviate the “big cloud of uncertainty” that has been slowing the deal making process. Regardless of the outcome, the conclusion of the election will add some visibility to the future. Either way, the next wave of deals is expected to have a cross-border emphasis.

What Private Equity Needs: Corporate M&A: Decreased corporate M&A has been killing PE, at least according to one executive. He explained that PE shops benefit from corporate M&A and the related divestitures. Without these spin offs, PE shops have been struggling to find the right deals. There’s a lot of data in the article but is this a case of causation or correlation?

Buyouts & Mergers Are in the Works, But Is the Return Worth the Risk? Looks like consumers are not the only ones losing confidence in the market. According to a recent publication by the Philadelphia Fed, many M&A execs are pessimistic about the future of deals. This uncertainty is causing execs to view deals as too risky. What will alleviate their concerns? The election? The BAE-EADS deal? Anything?

Cheap Financing Fuels U.S. Leveraged Buyout Boom: While the rest of the M&A world seems to be struggling, LBOs are on fire. Up 96 percent year-over-year, LBO volume reached $28.87 billion in Q3. The spike could be a result of cheap financing options and PE trepidation to take companies public. Are the mega LBOs of the pre-financial crisis returning? Probably not. But the spike does show some signs of life for M&A, even if everyone is afraid right now.

In case you didn’t see it last week, Heineken’s current deal is a mess of different investors and counterparties. For a little help sorting it all out check out this helpful infographic

Which is a more lucrative business: piracy or private equity? Thanks to Heidi Moore, you don’t have to wonder anymore.

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