40% Decline in Investment Banking M&A [Weekly M&A Trends]

Announced M&A volumes of $20.5 billion declined by 40% from the prior week.  There has not been any IPO pricing since Facebook’s $16 billion IPO on May 18th.

Sandler O’Neill’s Weekly M&A Trends:

Equity markets rose on lighter volume

  • The S&P 500 rose by 1.3% and the Russell 2000 growth index rose by 0.3% in the week. Quarter to date the S&P 500 has declined by 4.7% and the Russell 2000 growth index has declined by 7.6%.
  • Average daily U.S. equity trading volumes decreased by 2.2% in the week. Quarter to date volumes are flat with the 1Q12 average. Average daily U.S. volumes reflect the total number of shares traded on Tape A, Tape B, and Tape C in millions.
  • Equity mutual funds experienced net outflows of $1.7 billion in the week according to ICI data (on a one week lag). After turning positive in the previous week, flows turned negative again and have now been negative in twelve of the previous fifteen weeks.
  • Volatility, measured by the average CBOE VIX, declined by 2.8% to 22.5, and the DB currency VIX rose by 1.5% to 11.5.

Capital raising volumes increased while announced M&A activity was light

  • Equity underwriting volumes of $9.9 billion improved by 16% from the prior week’s level. However, quarter to date, equity underwriting volumes are averaging 21% below the 1Q12 weekly average. We note that there still have not been any IPO pricings since Facebook’s $16 billion IPO on May 18. Note: prior weeks are subject to revisions.
  • Corporate debt underwriting volumes of $54.2 billion improved by 42% from the prior week. However, quarter to date, corporate debt underwriting volumes are averaging 37% below the strong 1Q12 weekly average.
  • Announced M&A volumes of $20.5 billion declined by 40% from the prior week. Quarter to date, announced M&A volumes are averaging 6% above the 1Q12 weekly average.
  • Completed M&A volumes of $32.9 billion improved by 89% from the prior week. Quarter to date, completed M&A volumes are averaging 18% above the 1Q12 weekly average.
Disclosure: I do not have a position in any stocks mentioned in this article, do not have a plan to initiate a position within the next 72 hours.
Disclaimer:  The information, opinions, material, and any other content provided in this article is for informational purposes only and is not to be used or considered an offer or solicitation to buy or sell securities, investment products, financial instruments, or to participate in any particular investment strategy. The information, opinions, material, and any other content provided in this article does not constitute as a recommendation or as advice to buy or sell securities, investment products,  financial instruments, or to participate in any particular investment strategy.



Leave a Reply