Looked at in one way, this summer was a dire time for deal-making. But from another perspective, it's been a great one.
The dollar value of mergers announced this summer - specifically, between June 1 and today - reached $191.9 billion, according to Standard & Poor's Capital IQ. That's the lowest volume of summertime deals since the financial markets began trembling in the summer of 2007, surpassing only the $149 billion worth of transactions announced in 2009.
But take a look at the market in a different light. Roughly 3,400 takeovers were announced during that same period this year, the second-highest number since the summer of 2007.
So what gives? Several mergers specialists, a surprisingly large number of whom were still in the office during the last week of August, say that confidence in corporate boardrooms and corner offices is rising. These bankers and lawyers cite many of the same refrains, including enormous amounts of cash on companies' balanc e sheets and an acute need for growth, as primary drivers for mergers getting done.
And they say that their pipelines of works-in-progress is still full.
But the preferred transaction isn't a transformational deal so much as a “bolt-on†one, a takeover that adds to an existing division instead of bringing in an entirely business line. Many of these mergers have tended to be rewarded by acquirer's shareholders, as in cases as disparate as Aetna‘s takeover of Coventry Health Care and National Oilwell Varco‘s purchase of Robbins & Myers.
More ambitious acquisitions have tended to draw investor fury. Daikin Industries' shares dropped 3.5 percent on Wednesday after it announced a takeover of an American rival, Goodman Global, that analysts said could tax the Japanese air-conditioner maker's finances.
In the words of one deal maker, “This is the new normal.â€
Below are the volumes and number of deals announced between June 1 and August 29 f or each year since 2007.
| Source: Capital IQ | ||
| 2007 | $359.6 | 2,989 |
| 2008 | $321.9 | 2,739 |
| 2009 | $149 | 2,369 |
| 2010 | $192.7 | 3,220 |
| 2011 | $284.1 | 3,587 |
| 2012 | $191.9 | 3,400 |
