November is starting off with a bang for mergers and acquisitions dealmakers, with 41 announced U.S. deals worth $47.5 billion, according to Dealogic. This compares with November 2008 that had 575 deals worth $19.8 billion.
Large Wall Street banks have been the biggest beneficiaries, but some boutique firms are also getting a slice of the action. Large banks such as Goldman Sachs Group Inc. and Barclays Capital and smaller firms such as Evercore Partners have advised on deals this month.
November has surpassed October's deal value in the first few days, as there were 522 deals worth $29.8 billion in October, according to Dealogic. Year-to-date there have been 5,786 U.S. deals worth $619.8 billion, according to Dealogic.
Merger and acquisition activity waned over the past year due to the financial crisis and the inability for firms to access the capital markets, hurting investment banking profits on Wall Street. While banks have indicated that acquisition conversations between company management teams have been taking place the past few months, many executives were unwilling to put ink on the deals.
But on third-quarter earning conference calls last month, many Wall Street chief financial officers indicated the pipeline was growing. As the shift in momentum changes, it could result in higher investment banking profits for Wall Street banks.
"The M&A market is stabilizing and improving moderately as firms have increased access to the capital markets and confidence is returning," said a senior M&A banker at a boutique firm.
On Tuesday, Warren Buffett's company, Berkshire Hathaway Inc., said it would acquire the 77.4% of railroad operator Burlington Northern Santa Fe Corp. that it didn't already own. The deal values the railroad operator at $34 billion, plus $10 billion in debt. It is the third-largest U.S. deal, including debt, and the fifth-largest global deal year-to date, according to Dealogic.
Advising on the deal were Goldman Sachs and Evercore Partners. Evercore has advised on large deals this year, including Wyeth's sale to Pfizer Inc., the largest deal of the year so far.
Other deals this week include tool maker Stanley Works buying rival Black & Decker Corp. for $4.5 billion in stock Monday. On Sunday, Denbury Resources Inc. an oil company, entered an agreement to purchase Encore Acquisition Co. for $3.25 billion. Smaller deals include Peets' Coffee & Tea Inc.'s plans to acquire Diedrich Coffee for $213 million. Banks such as J.P. Morgan Chase & Co. and Deutsche Bank advised on those deals.
The pickup in the market gives strength to many analysts' and industry participants' expectations that 2010 will be a very active deal year.