PricewaterhouseCoopers M&A insights report: Continued instability in the financial services industry hampers deal activityA flurry of unsettling events in the financial services sector has slowed deal activity in the United States (US) financial services industry. For the first six months of 2008, there were 375 financial services deals (disclosed and non-disclosed), a 29 percent decline in deal volume from the same period last year and a 26 percent drop from the second half of 2007 (Thomson Reuters).
2Q 2008 US IPO Report: US IPO activity dwindles amid market uncertainty
After a robust year of IPO (initial public offering) activity in 2007, the number of listings in the United States (US) shrank in the first half of 2008. For the first six months of 2008, 42 IPOs raised $29.3 billion compared with 147 IPOs that amassed $32.8 billion for the same period last year. IPO volume (number of deals) for the first half of the year plunged more than 71 percent from the same period in 2007. While IPO value seemed relatively stable, the $17.9 billion VISA IPO skewed the amount of proceeds raised for the first half of 2008. Excluding the VISA IPO, the proceeds raised for the first half of 2008 were $11.4 billion, a third of the corresponding 2007 amount.
US mid-year outlook: Private equity firms reinvent themselves in challenging credit environmentInbound M&A activity recovering and getting strongerIn the current credit market where access to syndicated loans to finance large transactions is limited, private equity firms look for alternatives ways to deploy capital, focusing on distressed investing, private investments in public entities (PIPEs), partnering with corporate buyers and minority investments. Inbound investments into the United States will continue for the remainder of the year and accelerate into 2009, according to the Transaction Services group of PricewaterhouseCoopers.
After a record year of US IPO activity in 2007, 2008 is off to a sluggish start
United States IPO (initial public offering) activity in 2007 was the highest since 2000. During 2007, 296 IPOs generated $65.1 billion in proceeds compared to 236 IPOs that raised $49.9 billion in 2006. The turbulence in the credit markets did not hinder IPO activity in the latter half of 2007. In fact, the fourth quarter, with 101 IPOs, was the most active quarter in terms of IPO volume in the last eight years. 2007 IPO activity was fueled by special purpose acquisition company (SPAC), alternative investment manager (AIM) and non-U.S. company IPOs.
US IPO activity in the first quarter of 2008 is off to a very slow start. There were 25 IPOs in the first quarter of 2008, down significantly from 68 IPOs for the same period last year. IPO proceeds for the first quarter of 2008 were skewed by the $17.9 billion Visa IPO, the largest US IPO in history.
2007 global power M&A soars to record levels, despite credit crunch. North American power deal value jumps 34 percent to $95.2 billion in 2007, representing 26 percent of the global value
Global power (electricity and gas) mergers and acquisitions (M&A) soared to new record levels in 2007, despite the effects of the credit crunch, according to PricewaterhouseCoopers’ 2007 Power Deals report, an annual review of M&A within the global electricity and gas market. 2007 was a banner year with global deal value reaching $372.5 billion, a 25 percent year-over-year increase and nearly nine times above the $43.0 billion recorded in 2003. Global deal volume jumped from 623 deals in the prior year to 768 in 2007, an increase of more than 23 percent.
Power deal activity in North America―Canada and the U.S.―soared to $95.2 billion in 2007, a 34 percent jump from 2006 and a 56 percent growth from 2005. Driving the growth in deal value was the $43.8 billion buyout of TXU, Corp. by a private equity consortium led by Kohlberg Kravis Roberts & Co (KKR), Texas Pacific Group (TPG) and Goldman Sachs Capital Partners.
Disruption in the US credit markets to create some favorable valuation opportunities for buyers in 2008
US M&A activity in 2008 will be dominated by corporate and foreign buyers and the middle market will continue to be active, according to the Transaction services group of PricewaterhouseCoopers. Public-to-private transactions will be on hold; however, the downturn mega private equity deals will be offset by the increase of international buyers. For the first 11 months, announced deal value totalled $1.5 trillion, up from $1.3 trillion for the same period last year. Although private equity activity has fallen in the second half of the year due to the tightening of the credit markets, it still grabs 39% of the total deal value, up from 35% in 2006. What other trends driving activity in 2008 and how long will the credit crunch last? Which industries are likely to be active? How accurate was our last year's forecast? Find the answers to these questions in our 2008 forecast.
2007 set to exceed 2006. A relatively solid third quarter contributes to a strong nine month performance.
As expected, US IPO activity for the third quarter of 2007 declined from the robust activity witnessed in the second quarter when 71 IPOs generated $21.0 billion. However, the 44 IPOs that raised $11.5 billion during the third quarter outperformed Q3 2006 when $8.0 billion was raised from 39 IPOs. In terms of proceeds, non-US issuers contributed 44% to the total quarter value, up from 18% in Q2 2007 and 11% in the third quarter of 2006. Financial sponsor backed IPOs comprised 25 of the 44 deals during the third quarter.
Financial sponsor-backed IPOs drive second quarter activity
Second quarter IPO activity continued to build on the momentum from the first quarter raising more than $21.0 billion via 71 IPOs. This is the highest second quarter in terms of volume and value since 2000 when 98 IPOs raised $33.3 billion. Driving second quarter activity was financial sponsor-backed IPOs which contributed over half of the quarter's IPOs and generated more than 60% of total proceeds. The Blackstone IPO, the largest offering, contributed 20% or $4.1 billion to total value.
2007 expected to be a robust year for US entertainment and media transactionsThe flood of mega private equity transactions in the entertainment and media (E&M) sector announced in the last two quarters of 2006, along with strong deal activity in early 2007, will lead to an even more robust year of transactions, according to PricewaterhouseCoopers’ E&M Transaction Services practice. Its new study,
2007 M&A insights – US entertainment and media industry, reports that 132 deals announced in 2006 are slated to close in 2007. Building on this backlog of deal activity, both corporate buyers reacting to competitive pressures and changing technologies and private equity funds flush with cash are expected to continue investing in the sector.
PricewaterhouseCoopers launches valuation services in the US and announces new leadership
PricewaterhouseCoopers today announced the launch of a US valuation practice that offers a full range of valuation services. Valuation assessments provide critical input for a variety of corporate initiatives, including evaluating and structuring transactions; managing accounting, financial reporting and tax matters; resolving value-related issues surrounding disputes; and assessing strategic and tactical options that support business decision-making. By finding issues early and embedding applied valuation skills with financial reporting, tax, strategic and industry expertise, PwC believes it has created a service for non-audit clients that is truly distinctive in the market.
