Archive for January, 2009

M&A Deal Volume, 2008: It’s all relative…

Posted on Saturday, 3 January 2009. Filed under: Commentary, Mergers |

Do you really want to know? Of course you do. Bad news is exciting. Too exciting.

The market for M&A deals dropped to their lowest levels since 2005 — to just under $2.9 trillion. A decline of 28% globally. See … it wasn’t that bad, was it. It’s all about relativity. If we’d just had three years of $3.0 trillion in deals in 2005, 2006 and 2007, then this wouldn’t really seem low. Everyone would still be talking about a robust market, because these levels are well above all but two years of the last merger wave (in 1999 and 2000). It is just that we’ve gotten used to increases in the number and size of deals.

What’s changed? Private equity-backed deals were driving the market over the past several years. They declined 72% in 2008. These are the deals that drove the pricing for many non-PE deals as well. Thus, although they represented only under $200 billion (only?), they did have a larger impact on the overall market.

Where else was it bad (remember, the relative term of ‘bad’)? Europe was down 34%, the US down 25% and the Asia Pacific region ‘only’ 17%. Europe was actually even worse, when you look at the deals actually done because four of the largest ten European transactions were state bailouts: Royal Bank of Scotland, Lloyds TSB / HBOS, Fortis and ING.

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