On looking forward (and back)…

images.jpegFor many people, this is the first day back to work after 12 days off. And given that it’s the first real work day of the year, it’s also a time for various performance reviews, like this one that my friend (and fellow blogger) Barry Ritholtz tackles here and various predictions.

With that in mind, I asked the folks at Mergermarket to come up with some stats on merger activity in 2007, breaking deals into small cap (under $499 million), mid cap (under $1 billion) and large cap (over $1 billion) and thought the results were pretty interesting:

While the number of small cap deals declined in 2007 to 2,096 from 2,310, the average deal size remained the same at around $88 million and the number of deals that failed to reach completion declined. For both mid-caps and large caps, there were more deals in 2007 than in 2006 (251 vs. 210 for large caps and 168 vs. 153 for mid-caps), but the size of the deals declined between 2006 and 2007. And the number of deals that failed to reach completion, like today’s news about PHH (PHH), began to accelerate during the fourth quarter, especially among the large caps.

What does this all mean for 2008? Unfortunately, I’m not in the prediction business and will leave that to folks like Freeman & Co. which put out this rosy forecast today. But the M&A trends are clearly very interesting.