Acquisition Marketplace Review - The Journal of Applied M & A Theory

M&A MarketPlace

M&A Closes 1999 at Record Levels
Merger and acquisition activity ended the century at record levels. According to data aggregated by Mergerstat, the value of domestic deals soared to $1.418 trillion. This represents an impressive 16% increase over 1998. The number of announced deals was up by 17.8% to 9,201.

Record deal values were propelled by a 30.9% increase in the number of transactions valued $500 million and above. Mega-deals over $1 billion represented only 2.1% of the total, but accounted for 76% of the aggregate value for the year! The average transaction in 1999 was $425.5 million, up by 8.1%. However, if you remove the 194 deals over $1 billion, the average deal was closer to $107 million.

The middle market was a mixed bag. The number of deals decreased by 21%, but the average value per deal was up by 26% to $26.5 million. There were 2,245 middle market deals (under $100 million) in 1999 registering an aggregate value of $59.4 billion as compared to 2,853 deals in 1998 with an aggregate value of $60 billion.

Prices Not Disclosed For Most Deals
Mergerstat gathers its data from a variety of sources including SEC filings and press releases. In the majority of transactions the parties are private entities or, if the buyer is a public company, the transaction does not meet the requirements for disclosure of price and terms. Despite the lack of transaction terms, the Mergerstat data includes any announced deal believed to exceed $1 million. For that reason almost 64% of all deals do not include price information (5,868 out of 9,201), a very significant segment of the data. Interestingly, the “not disclosing price” segment increased by 28% over 1998.

While transaction data is not available on 64% of the deals, it is a fairly reasonable assumption that the majority of these deals are in the middle market. Therefore, the middle market is probably much more active than the “reporting” statistics indicate. In addition, there are an unknown number of private transactions that are not reported at all. See page 2

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