According to Mergermarket global M&A activity decreased by as much as 30% in 2008 reaching $2.5 trillion (there’re various reported figures but all come to agree to pretty much the same numbers regarding activity slowdown). In North America M&A value decreased by a staggering 50% to $ 840 billion in 2008 while its share in global M&A fell to 30% from 40%. Activity in Europe decreased by 25% to $1,080 trillion with Central Europe being mainly affected across the board; in other countries the private equity component was the one mainly hurt. Financial Services continue to be a very active sector globally due to the financial crisis and many transactions of companies under distress (Merrill Lynch, Wachovia, Lloyds, Royal Bank of Scotland, Fortis) while the energy sector and manufacturing have also seen good activity (that could have been even better if the Rio Tinto/BHP Biliton deal has gone through. Consumables (where the historical deal between InBev and Anheuser took place) also had a good year. Transatlantic deals were down by a smaller percentage compared to the whole market (20%) to $270 billion still sizeable at around 10% of overall value between North America and Europe. Of course the main causes behind this decrease has been the deleveraging that took place in the US and around the world where large private equity driven LBOs, often at high valuation, came to a stop or were even cancelled.
One can analyze the figures from various angles and without doubt come to realize the slowdown however those that want to see the glass half full might recognize that what this crisis done is to bring us back to 2005 levels. Excluding the drive from leveraged transactions that mainly focused on large scale deals there’s still enough room for activity. Personally I believe that there’s significant opportunity for middle market low leverage or all-equity deals especially when expectations for lower valuations will sink in. Problem is of course that there’s not that much available capital or appetite for transactions to both strategic or financial investors, but this will change over time.