Markets are Volatile. But What’s the Deal with Deals?

Semiconductor and software company Broadcom is in talks to pay around $60 billion for cloud computing company VMware, the WSJ first reported yesterday.

Pending delays/talks falling apart, the deal is expected to be officially announced on Thursday. If all goes well, it'll mark the second-biggest acquisition announcement of this year (and one of the biggest tech deals ever).

📸 The big picture: This report comes on the heels of declining markets and last week’s big stock selloff. But major deals are still doable despite the volatility, in part because the declines have made acquisition targets more affordable and because sellers in some cases are more willing to accept stock as currency, in the hopes that they will benefit when it rebounds, according to the WSJ.

Yet, even though there’s been a notable acquisition or two (like Microsoft’s pending ~$69 billion purchase of Activision Blizzard), deal flow and IPO activity has slowed down significantly this year.

• US companies have struck ~$790 billion of mergers so far, down 31% from the same period last year. IPOs are even worse – the number of deals dropped 72% in the first quarter.
• Part of that drop could be attributed to increased SEC oversight of SPACs, aka special purpose acquisition companies. There were 613 SPAC initial public offerings in 2021, a large jump from 248 the year before… but there have only been 67 so far in 2022.