Published: Wednesday, 3rd June 2020
In the News
VC environment continues to be supportive of early-stage companies in their fundraising through these uncertain times. Although the number of deals declined both WoW and MoM, capital invested in the space continues to remain strong, in fact, recent weeks have seen more capital deployed over a four-week period than during pre-COVID lockdown.
Although VC deal count continues to trend lower, falling below 1,000 deals for the first time since 2017, invested capital remains strong. Over $22 billion has been put to work in the VC space, a 2.5% YoY, and 28.8% MoM increase. It must be noted that Waymo’s $3 billion transaction accounts for over 10% of total invested capital in May, regardless it doesn’t change the story.
Select VC Transactions
On the surface invested capital in private equity deals may have picked up, but two-thirds of the $6 billion deployed were split between three transactions; deal count continues to show weakness suggesting the pickup isn’t broad-based. Nonetheless, trailing-four-weeks invested capital increased by 27% and 43 deals closed is an encouraging improvement from March and early April.
May turned out to be the slowest month for private equity in deal volume terms since the GFC and the slowest in capital investment terms going back to February 2012. The capital getting deployed remains relatively concentrated with the top five deals in May accounting for over half of the total value.
Select PE Transactions
This week saw M&A transaction volume decrease however such a figure is 30% higher MoM thanks to a low base in April; meanwhile invested capital declined 34% MoM. Of the $8 billion deployed through M&A this week, almost the entirety was attributed to the $7.4 billion acquisition of WABCO. M&A transactions remain the weakest space among the three investment types that we follow, perhaps to no surprise.
Despite showing a solid $97 billion in total M&A value in May, two-thirds ($63 billion) of the figure was thanks to the completion of AbbVie's acquisition of Allergan which was a long time in the making. In general, the M&A environment for the month of May remains relatively quiet; invested capital declined 48% versus the same time last year – this includes the Allergan transaction. Breaking down the M&A environment in May we see close to 70% of the transactions concentrated in healthcare thanks to Allergan, followed by 10% in Energy as the sector continues to consolidate.
Select M&A Transactions
A Look at the Market’s M&A Reports
Amidst uncertainties with regards to global economic conditions and the talks of solvency risks looming the wider corporate world, we took a quick look at some of the leading firms’ publicly available reports on M&A Outlook. Some of the reports featured were published prior to the global spread of COVID-19 while some had been post-COVID; the timing splits two realities apart.
1. COVID-19’s Impact on Global M&A – BCG (link)
2. The state of the deal: M&A Trends 2020 – Deloitte (link)
3. 2020 Global M&A Outlook – JPM (link)
Going into 2020 most market participants saw conditions in the M&A space not as spectacular but expected somewhat of the same deal-making environment. That narrative changed dramatically after the pandemic hit with surveys showing corporate executive confidence collapsing and ample dry powder, particularly in PE funds, likely to remain on the sidelines.
Other reports of note:
Jane Phornprapha, President
David Benkert, Analyst
Disclaimer: You are free to use any data or commentary from this report in your articles as long as the source is cited as “Data provided by Pitchbook; report published by Third500 LLC”