Americas Mergers & Acquisitions Review

Financial Sponsors Lose Their Edge

Although financial sponsor activity slowed down significantly since the first half of the year, US financial sponsor volume increased by 7.1% year-over-year and captured 29% of the US M&A market in 2007. The credit crunch was the main factor for the slow down as volume during the second half of 2007 totaled US$126.4 billion, a 62.9% decline from the US$340.8 billion in activity during the first six months of the year, and fourth quarter volume totaled just US$22.2 billion. Notable deals impacted by the US sub-prime mortgage crisis included Cerberus Capital’s leveraged buyout of United Rentals and the JC Flowers-led consortium buyout of Sallie Mae.

Foreign Investment in US Companies On The Rise

Cross border volume involving US target companies increased steadily throughout 2007 as the US dollar weakened, thus making US companies attractive takeover targets or investments by foreign buyers. US inbound volume more than doubled during the final quarter of 2007 compared to fourth quarter 2006, while year-over-year US inbound volume increased 92.2%.