Posted by Gail Weinstein, Steven Epstein, and Philip Richter, Fried, Frank, Harris, Shriver & Jacobson LLP, on Sunday, January 16, 2022
Notwithstanding Record M&A Deal Activity, Significant Drop-off in Deal Values in Recent Months
Editor’s Note: Gail Weinstein is senior counsel, and Steven Epstein and Philip Richter are partners at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven J. Steinman, Warren S. de Wied, and Brian T. Mangino.
Notwithstanding Record M&A Deal Activity, Significant Drop-off in Deal Values in Recent Months
While global deal activity measured by number of deals has remained at record or near-record levels throughout 2021, average deal value has declined steeply over the second half. Average deal value fell to $109.5M in October 2021, from a high of $187M in July 2021 (reflecting a month-over-month decline trend starting in August). The median P/E ratio reflected in deal values fell to15.3x earnings for the three months ending October 2021, from almost 26x for 4Q 2020. These statistics suggest a continuing very robust deal market, but possibly with a pullback from this year’s record level.
