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M&A activity at highest level since global financial crisis, says BDO

A “seller’s market” and an appetite for growth has seen merger and acquisition (M&A) activity return to its highest level this quarter since the pre-recession boom times (Q2 2008), according to the latest PCPI/PEPI analysis from BDO.

The third quarter of 2015 saw a total of 631 deals completed, which is a significant uptick from last quarter’s 509 deals.
 
The third quarter saw trade buyers complete 532 deals, which reflects a 29% increase from the previous quarter. Levels of private equity activity have continued to rise modestly over the past 12 months, with 99 deals completed in Q3 compared to 97 the previous quarter. However, investors are a little frustrated by trade buoyancy and are still finding it hard to put their cash to work.
 
As the economy continues to perform well, trade buyers are actively seeking to make strategic acquisitions in order to enter new markets and expand their businesses, pushing private company M&A to its highest levels since Q2 2008.  The trade (9.5x) and private equity (10.7x) multiples have both remained at high and fairly constant levels throughout 2015, highlighting that vendors are getting a good price for quality assets.
 
Roger Buckley, M&A Partner at BDO, says: “It has been an extremely busy summer for dealmakers, with M&A activity at boom time levels. We foresee a strong end to the year and all signs are pointing towards an even stronger 2016.
 
“Trade acquirers have shown a voracious appetite to acquire businesses. Private equity funds have remained active and are judiciously seeking the right investment opportunities, while also looking to avoid past mistakes.
 
“As the economy continues to grow, trade buyers are becoming more optimistic and turning to strategic acquisitions to realise growth ambitions. When a target company is key to the strategy of a trade acquirer, we are seeing many auctions where private equity is being outbid by trade buyers. This remains a strong ‘seller’s market’.”

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