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Mergers & Acquisitions

U.S. Public M&A Market Overview

For the second consecutive month, the rate of new U.S. public M&A deals continued to increase. There were 28 new deals announced in May, valued at $100.025 billion, representing a 67% increase in equity value over April and the highest number of new deals since November. Technology, healthcare and financial services were the most active industry sectors by deal volume. Seventeen deals were closed during the month totaling $94.5 billion. Three deals valued at $43.7 billion were withdrawn during May including Office Depot and Baker Hughes both of which failed to get regulatory approval. Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan led the market with the most definitive agreements announced in May, having advised on three deals valued at $10.5 billion. Skadden Arps was the most active law firm on closed deals in May, completing 4 deals for $72.5 billion.

Deal Point Trends - U.S. Public Targets
May 2016 Change vs. April
Avg. 1 Day Premium 33.37% up 3.82
% of Mergers that are Accretive 28.6% down 13.10
Avg. Target Break Fee as % of Equity Value 4.03% up .53
Avg. Reverse Break Fee as % of Equity Value 5.48% up .58
% of Deals that were hostile/unsolicited 7.1% down 8.4

Market Leaders - U.S. Public Mergers

The top ranked U.S. public M&A legal advisers in May were Smith Anderson on U.S. public M&A deals with definitive agreements announced during May. Wachtell Lipton ended the month on top for overall announced deals in May while Skadden Arps took top honors in closed deals.

Category Top Ranked Firm Equity Value ($bil)
Definitive Agreement Smith Anderson 10.5
Announced Wachtell Lipton 62.4
Closed Skadden Arps 72.5

M&A Adviser Fee Watch

$826.5 million in M&A advisory fees involving U.S. public targets have been disclosed through June 3. Goldman, Sachs & Co. led the market with $230 million in fees disclosed. Morgan Stanley took second place among financial advisors in disclosed fees. Citigroup rounded out the top three.

High-Yield Bond News

New Issue Volume

In May, 14 S.E.C. registered high-yield new issues were priced raising $12.85 billion, the second highest monthly level since January 2010. New issue dollar volume in May was 193.7% more than the amount raised in April.

High-Yield Bond Covenants

We evaluated the covenants in May's S.E.C. registered new issues and found that 43% contained limitation on restricted payments provisions up from 29% for similar deals priced in April. Limitations of indebtedness covenants were present in 57% of new issues, the same percentage as deals priced in April.