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Key drivers that reignited US M&A market to continue into 2015

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Key drivers that reignited US M&A market to continue into 2015

The party will, apparently, keep rolling on.

According to a report issued today by law firm White & Case LLP and Mergermarket, the first half of 2014 saw deal values for US M&A reach a five-year high, with 2,329 deals worth US$694 billion, representing a 26% increase in volume and almost a 100% increase in deal value when compared to the first half of 2013. This substantial increase has been driven in part by the stable US economy, a supportive regulatory environment, robust shareholder support for deals and corporates pursuing transformative opportunities.

"The US economy and M&A market are in a much better state than they were five years ago—and are quite strong compared with Europe and Asia," said John Reiss, Head of White & Case's Global Mergers & Acquisitions Practice. "Despite recent stock market volatility, 2015 will likely be a very active year for US M&A."

"Despite recent stock market volatility, 2015 will likely be a very active year for US M&A."

A number of trends point to continued optimism for 2015 including the surge in megadeals, the number of hostile takeover attempts, broad increase in the use of equity to fund deals and the rate of inbound activity.

Key highlights from the report include:

  • Megadeals have seen the sharpest rise with 69 such deals in Q2 2014 alone—the highest volume of deals worth US$1 billion or more in the last five years.
  • Technology, media and telecommunications was the most active sector for M&A in the first half of 2014, accounting for 35 percent of M&A activity by value. Deal values of US$233.7 billion and deal volumes of 497 in the first half of 2014 represented the highest level of activity since 2009. This surge was driven by consolidation of broadband, TV and mobile services combined with growing demand.
  • US inbound values hit a seven-year high, with 365 deals worth a total US$190.9 billion. This represents a 29 percent increase by volume and a fourfold rise by value in comparison with the same period in 2013.
  • Private equity exit values reached the highest level in the last five years and exit volumes rose 55 percent from the first half of 2013 to the first half of 2014; PE firms sold 284 companies worth US$105.7 billion to corporates in the first half of 2014, up from 215 deals worth US$42.9 billion in the first half of 2013.

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