WSJ Deal Journal, August 7, 2007, 5:08 pm:
August may turn out to be the cruelest month for the M&A business.
According to Thomson Financial, this has been the slowest August so far for deals in four years. There have been 170 announced, with a total value of $13.2 billion. That compares with 236 deals with a total value of $19.6 billion a year earlier. The last time deal activity was so slow in this period was 2003, when deal makers struck 146 deals valued at $8.3 billion. (It may not be a coincidence that most bankers date the start of the mergers-and-acquisitions boom that now may be in its death throes to some time in 2003.)
As we pointed out in this post last week, the tremors rippling through the credit and stock markets hadn’t shaken the deal market as of July, when companies and private-equity firms world-wide struck $544 billion of deals. That was more than double the year-earlier total.
Of course, one week does not an M&A slowdown make. Still, few deal watchers think an LBO with an 11-digit headline (at least $10 billion) is a possibility with the financing markets in their current state. So it is hard to imagine the early August returns aren’t a signal of more of the same to come. If nothing else, it is almost certain that deal activity won’t maintain the scorching pace of earlier in the year. With deals like Virgin Media and the $15 billion sale of Cadbury Schweppes’ U.S. drinks business getting sidelined, how could it not?