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PE & VC News

Pitchbook recently released their accounting of mergers and acquisitions performance.

Unless the fourth quarter of 2015 falls off the planet, 2015 is set to reach an all-time high in value terms.  Overall, if deal value climbs only by the amount it did in the first quarter of 2014, deal value in 2015 will reach about $1.7 trillion, about $200 billion above the 2014 count.

Unsurprising to industry insiders, deal values have exploded over the past few years.

Here’s a look at some of the details.

The Broad Picture

First, here’s a look at the broad picture of the number of deals and deal value, according to Pitchbook.

Overall, deal value in the first, second, and third quarters of 2015 came in at $526 billion, $445 billion, and $437 billion.  These figures represent strong increases from where deal value came in at during 2014 through the first three quarters, coming in at $323 billion, $358 billion, and $385 billion.

The strongest quarter was the first quarter of 2015 at a massive $526 billion.

Switching to the number of deals, the number of deals look to have peaked, failing to reach prior periods’ experience.

Through the first three quarters of 2015, the number of deals is at 14,412.  This is off slightly from the 15,055 deals the industry did through the first three quarters of 2014.

deal count and value Source: Pitchbook

Deal Size Breakdown

Shifting now to a look at the M&A data by deal size, shown in the following graphic.

Perhaps the first item that jumps out is the gradual shift towards a preference for larger deals, which peaked in the first quarter of 2015 at over 50% for deals valued at greater than $5 billion.

Fascinatingly, in the first quarter of 2013, it was around 15% of total deal value.

The gain in deal value for deals valued at greater than $5 billion came at the expense of all other deal values, from deals valued at less than $100 million on up.

deal size Source: Pitchbook


Private Equity’s Take of the Overall M&A Action

Lastly, here’s a look at how much of M&A activity is stemming from sponsor-backed (private equity) activity (orange line).

Overall, M&A activity stemming from sponsor-backed private equity has been fairly constant over the past few years, with the most recent click at 26%.

ma Source: Pitchbook



In looking at the trend in private equity activity through the first nine months of 2015, it’s quite possible that 2015 may turn out to highest M&A activity ever.

If M&A activity comes in at a low $323 billion in value in the fourth quarter of 2015, total deal value in 2015 will reach about $1.7 trillion, about $200 billion above were deal value reached in 2014.

Deals have exploded in value over the past few years, even though the number of deals has not kept up with its value counterpart.


If you’re an observer of global finance, you know the financial world is becoming ever more competitive.  Among the many competitive forces is geography.  Finance firms move and shift employment for a number of reasons, including incentives, competitive wages, startup culture, and lots of other factors. With this as the background, which are the 20 top cities for global finance?

Here’s a geographic view of Z/Yen’s Global Financial Cities Index top 20.  Can you guess which are in the top 5?

Top 20 GFCI Cities

The Top 20 Cities

In 20th place is DOHA, Qatar.  The financial hub is the second most important financial headquarter city in the Middle East, according to Z/Yen’s accounting.

Number 19 is Frankfurt, Germany.  Often thought of as the headquarters of financial Europe, a low-scoring Frankfurt slipped from the prior year, even with the newly developed, massive European Central Bank headquarters.

Montreal, Canada, coming in at number 19, is the third highest ranking Canadian city.

In 17th place is Luxembourg, the tiny haven for individuals searching some financial privacy.

Coming in at number 16 is Shanghai, China.  The financial capital of mainland China came in a disappointing 16th place, largely due to western financial leaders’ desire to see regulatory and political regime changes.

In 15th, 14th, and 13th places respectively are Vancouver, Canada, Riyadh, Saudi Arabia, the most important financial hub in the Middle East, and Geneva, Switzerland, a city largely dependent on international investors searching out financial privacy and commodity traders.

Next is Washington, D.C. at number 12. The political capital of the United States is probably disappointing to many, given that government shouldn’t be a reason for financiers to set up shop or pay attention.  Welcome to a new era of finance.

In 11th place is Toronto, Canada, the top Canadian city on the list, followed by Boston, Massachusetts at number 10.  The headquarters of some very large mutual funds and private equity firms, Boston continues to be a destination for financial firms.

Ninth place is held by Chicago, Illinois.   The home of the Chicago Board of Options and commodity trading changed little from the prior year.

San Francisco, California, the only California city on the list, earns its spot at number 8 on the list solely because of an incredibly hot venture capital connection with Silicon Valley’s technology startups.

Coming in at 7th place is Seoul, South Korea.  The capitalist country of the Koreas draws lots of international capital from the west.

Sixth place is held by Zurich, Switzerland, with Tokyo, Japan, as number 5, the sole city in the world’s third largest economy when measured by geopolitical boundaries.

Singapore is number 4.  Singapore ranks high because of a top ranking in its business climate conditions.

In 3rd place is Hong Kong.  Hong Kong is often the first place where western money lands when looking for a home in China.

Second place goes to London, England.  The European financial capital continues to make its case as being the capital of the global financial world.

Lastly, in 1st place is New York, New York.

Top 20 GFCI Cities2

Some of these rankings may come as a surprise, but the top two, New York and London, are likely not. For those looking for employment in the financial sector, keeping these geographic hot spots in mind could come in helpful for the job search!


On usually the first Friday of every month, the Bureau of Labor Statistics (BLS) releases its estimate of net job creation (or destruction) for the nation as a whole.  The figures in the report are perhaps the most influential economic indicators in the world, including estimates on wage growth, unemployment, labor force, and industry job creation.

A couple of weeks after the national report is released, the BLS releases state level estimates.

Here’s what job creation through the first eight months of 2015 look like by state.

Job Creation by State in 2015 So Far

On top of the job creation geography are businesses headquartered in California.  Through the first eight months of 2015, net new jobs created is a little over 324K.  In second place is Florida at about 154K.   Rounding out the top five are New York at 93K, Washington at 66K, and Michigan at 63K.

On the other end of the job creation picture are states where businesses have been shedding jobs.  This group includes West Virginia (down 21K), North Dakota (down 10K), Oklahoma (down 7K), Kansas (down 6K), and Alaska (down 5K).

Growth in 2015

Why Is California on Top?

With such a high tax burden, a goofy regulatory environment, and a drought, how can California be on top?

Four reasons probably explain the results.  Unsurprisingly, the answer is probably more of “in spite of” rather than “because of” the deterrents to economic growth just mentioned.

First, California has the largest employment base, so job growth of 324K isn’t all that much.  Here’s a look at employment base by state.  If one converted the absolute job growth figures to a percentage basis, job growth in California wouldn’t look so great.

Employment by State

Second, the figures provide relatively little reliability on what the growth is in terms of part-time and full-time.  With the onset of Obamacare and the high cost of labor in California, a large chuck of the employment growth is part-time.

Third, when looking at the figures by industry, employment in retail and leisure & hospitality dominates, which are low-paying industries.

With these three as the background, it’s still relatively amazing that job growth in California continues to be number one with the internationalization of labor and the mobility of businesses.

What’s the real cause?  The best possible explanation is the red hot private equity/venture capital/Silicon Valley conditions.  The world’s labor supply has keen interest in the Bay area, and this has far flung dynamic effects on other industries in California.


Overall, job creation in California continues to lead the nation, with total net new jobs through the first eight months of 2015 at a little over 324K.  The 324K net new jobs is well ahead of second place Florida at about 154K.

Although lots of factors influence job creation, perhaps the largest driver of California’s job growth is the red hot venture capital/private equity/Silicon Valley connection, driving lots of investment and human capital to the drought-stricken state.


The U.S. Isn’t Number 1 in Venture Captial Investments

September 21, 2015

When you think of venture capital/private equity investing, what’s the first place that comes to mind? If you’re like most, you probably think of Silicon Valley’s tech companies or biotechnology in Massachusetts, as places with a strong venture capital base. You’d be right.  On an absolute dollar basis, venture capital in the United States is still the […]

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3 Reasons the Fed Might Raise Rates in September

September 7, 2015

Unless you’ve actively tried to avoid the conversation, if you work in the financial world, the topic of the  Fed raising rates in September is unavoidable. Everyone has an opinion, which range from relief that the Fed is actually doing something besides providing the spike to the party’s punch, to disgust that the Fed would consider a […]

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Does Private Equity Employment Respond to Corporate Profits?

July 27, 2015

Everyone knows that the private equity business is about making profits.  Common sense would indicate that when corporate profits are growing strong across the board, employment in the private equity industry would also be going strong, and vice versa. Is this the case?  Here’s a look at the connection between employment in the private equity industry […]

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A Look at Private Equity Employment Compared to Other Financial Sectors

July 13, 2015

Every financial professional is aware of a chart like the following.  The following figure shows the month-over-month growth in employment in the U.S. Recently, job growth is the U.S. has been strong, with most of the recent months above 200K. The strength in the overall American labor market poses the question – how does private equity […]

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Is American Production Above or Below Trend?

June 29, 2015

In the world of private equity, a critical component of success involves evaluating what the trend is for a given industry or business. Among economic trends, there’s no bigger trend than GDP, a measure of all final production of goods and services. Is GDP, otherwise known as production, above or below trend? An Exponential Trend of Real […]

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Looking at Private Equity Deals by Federal Reserve Tightening Cycle

June 15, 2015

Unless the American economy completely unleashes in the next couple of months, the Federal Reserve is likely to raise the federal funds target rate sometime this year. The pending rate hike, at least if you believe indications from executives of the U.S. central bank, poses the question: what might a Fed rate hike mean for private […]

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Perhaps Sam Brownback is Right – Tax Cuts Are Boosting Kansas Employment Growth

May 18, 2015

Tax policy comes as second nature to investment bankers.  Earlier this month, the Census Bureau  its annual accounting of state government revenues.  It is a survey of all finances related to state government spending. The data allows researchers to address, in a broad way, various debates in the tax policy world. Among those debates, the most […]

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