M&A and capital markets update Q3 2014

Following a strong rebound of M&A activity in Q2, deal activity continued at a rapid pace into the third quarter with increases in both deal volume and value. According to a recently released M&A review issued by Thomson Reuters, the first three quarters of 2014 have been the strongest first nine months for worldwide deal making since the financial crisis. Global deal volume is nearing $2.3 trillion, and is tracking to surpass last year’s record. Deal activity in the US has been robust, with year-to-date deal volume up 11 percent over the same period in prior year. Year-to-date deal value grew exponentially, more than doubling in value over the prior year to $1.4 trillion. This was primarily due to a sharp increase in $1+ billion transactions, such as the Kinder Morgan’s $48.9 billion acquisition of Kinder Morgan Energy Partners LP. The US economy continues to experience sustained growth as evidenced by continuous improvement in the labor market, with unemployment rates at their lowest levels since 2007. The third quarter experienced other positive signs such as a rebound in leveraged loan volume and increasing equity markets, prompting a surge of near-record setting IPO activity. Over the last two years, the US has experienced an improved macroeconomic environment which has enabled the necessary fundamentals for deal making to remain in place. As market confidence remains high, we expect M&A activity to remain strong into the fourth quarter.

US middle-market M&A activity2,514 Deals

2014 – Q3 M&A and capital markets metrics

US middle-market enterprise value to EBITDA multiple8.8x
Cash and short-term investments of S&P 500$1,265 billion
Private equity capital raised in third quarter$35 billion

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