TAKING STOCK         

California-based Houlihan Lokey's Mergerstat, which tracks M&A activity in the United States, reported more than 7,700 transactions representing deals worth a record-setting $1.2 trillion -- 84 percent higher than 1997. It also reported that the average premium increased to 41.3 percent from 38.7 percent in 1997.

Banks account for a good chunk of those transactions. North Carolina's BB&T got in on the brokerage binge. It is acquiring Scott & Stringfellow (Nasdaq, SCOT: $38.25), the Richmond investment firm, for $131 million. And now the Winston-Salem bank is listed among the top pending deals for another acquisition: In August it announced plans to buy MainStreet Financial (Nasdaq, MSBC: $46) in a deal valued at more than $500 million.

SunTrust Bank's pending purchase of Richmond's Crestar Financial Corp. (NYSE, CF: $72) was hardly a surprise. Crestar was a prime acquisition target after First Union purchased Signet and Wachovia picked up Richmond's Central Fidelity and Charlottesville's Jefferson Bankshares.

"I wouldn't be surprised to see SunTrust make another foray into the commonwealth," says Robert D. Kipps, vice president in the McLean office of Houlihan Lokey. "This is an attractive market in a ... growing region of the country."

Old Dominion businesses may be on the selling side in the banking business, but in the technology and telecommunications sectors, there's a little more balance. There you'll find strong, growing Virginia companies on the buying side. America Online (NYSE, AOL: $155.44) has been a buyer, due in part to the strength of its stock. The Netscape purchase alone will cost almost $4 billion. Also on the buying side is Global TeleSystems (Nasdaq, GTSG: $62.94), which is purchasing Esprit Telecom in England. Tellabs of Illinois bid $639 million for Leesburg's Coherent Communictions (Nasdaq, CCSC: $54).

Among utilities, AES Corp. (NYSE, AES: $44.19) has been a big buyer as it expands its power-generating capacity worldwide.

What's in store for 1999? M&A observers expect technology companies will still be going strong, and there will be more banking acquisitions. Public utilities and telecommunications companies will stay busy because of deregulation, and government services companies will consolidate because there's high competition and less federal spending.

That may be good news for investors. But from a parochial perspective, there's reason for concern. "To lose three of the area's largest companies, that just causes us to think a little bit about the local economy," Kipps notes. "Jobs aren't disappearing," he says, "but it certainly is a little bit unsettling."

Leigh Anne Larance
Senior Editor