McKinsey Quarterly, the business journal of McKinsey & Company, just released a fascinating piece, A return to deal making in 2010, which is highly suggested reading.
The part I found particularly intriguing was that investors are currently viewing the average deal as creating value, not only for the sellers, but for the buyers. Looking at deal value added (DVA) currently, the net value created by M&A is at the highest level ever since McKinsey began tracking DVA. This is especially noteworthy as it comes from the same group often quoted regarding all the reasons why M&A deals go wrong (such as Where mergers go wrong).
The article also confirms findings in global M&A similar to those we highlighted recently in our Tech M&A Update webinar. For one, deal volumes rose last year for the first time since the crisis, but certainly remained well short of a deal frenzy. Other takeaways from McKinseys analysis of the broader market which also map to what we have monitored in the Tech sector include:
- Cross-border activity returned to pre-crisis levels, and once again account for a significant portion of global M&A
- Asian-Pacific buyers are increasing their outbound deal activities last year, doubling the number of acquisitions in the Americas and in Europe
- Private Equity deal making picked up, representing over one-quarter of the M&A volume in developed economies (OECD members)