M&A lawyers in Texas who thought the first quarter was bad should brace for even worse news.
Deal count was pathetically low during the second quarter of 2016 and the value of the transactions that were announced plummeted to lows the market has not seen since 2009 and the Great Recession. In addition, an increasing number of large deals being considered fell apart before closing.
The average value of mergers, acquisitions, divestitures and joint ventures involving Texas-based businesses, according to the independent research firm Mergermarket, dropped from $462 million in the second quarter of 2014 to $309 million last year to $163 million this past April, May and June.
Mergermarket reports that Texas companies were involved in 189 deals during the second quarter with a combined value of $30.77 billion – 56 percent less than last year and a 75 percent decline from Q2 2014.
Texas companies announced 377 M&A transactions during the first six months of 2016 – 15 percent fewer than the first half of 2015 and 27 percent less than in 2014, according to Mergermarket.
Legal experts say the lingering downturn in the energy sector, which accounts for 20 percent of Texas M&A activity, is causing privately-held oil and gas companies to decline to make the deal amount public.
Rick Dahlson, a partner in Jackson Walker’s Dallas office who heads the firm’s corporate and securities practice group, said the firm has stayed busy with numerous deals, but the number of “dead deals,” or transactions that fail to close, he has witnessed in the first half of the year is unlike anything he has seen before.
“We had three deals worth close to half a billion dollars in the last six months, and all deals have failed,” Dahlson said.
About Rick Dahlson
Richard F. Dahlson manages Jackson Walker’s Corporate & Securities group, one of the largest in the state. His corporate practice is complemented by his extensive experience in securities matters and he has represented both companies and investment bankers in over thirty public offerings and over forty PIPE transactions. His clients include large established companies as well as startups.
