US mid-mkt M&A deals now take longer time to complete

Amid tight liquidity conditions, the US mid-market merger and acquisition deals are now taking almost double the time to complete than it took in the third quarter of 2008. 

According to global deal tracking firm Dealogic in the third quarter of 2008, the US mid-market M&A deals used to get completed in just 59 days against 113 days in the first quarter (Q1) of 2009.   

In July-September 2008 when M&A activities were witnessing an uptrend it took considerably less time to complete deals, almost half the time it now takes owing to liquidity crunch in the market. A middle market M&A is defined as transaction between $100 million and $1 billion.

In the Q1 of 2009 the US Middle Market M&A deals took an average of 113 days to complete against 79 days in Q4 2008, Dealogic said.  

Mirroring the downtrend pursuant to the global economic downturn, the overall US targeted middle market M&A activities have fallen to $30.9 billion in 2009 year so far this year, down 61 per cent from the same period last year when $ 900 million were announced.

Also, in terms of number of deals there was a steep fall as the Q1 of this year witnessed only three mid- market M&A deals, against 13 transactions in the year-ago period.     

According to industry experts the merger and acquisition activities witnessed a significant slump after the collapse of investment bank Lehman Brothers in September 2008.     

Out of the deals that has been announced so far this year technology is the leading industry with $4 billion in M&A volume, closely followed by Healthcare with $3.9 billion.     

Dealogic added that "Goldman Sachs leads the US targeted announced M&A rankings with $5.7 billion, while the top mid-market regional adviser (a full service investment bank focusing on deals below $1 billion and focusing on deals within one region) are Scotia Capital with $900 million and Jefferies with $715 million."