M&A markets frustrated by lack of growth

Tim Wallace
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MERGER and acquisition (M&A) volumes have plunged so far this year despite stock markets rising sharply – and industry insiders do not expect a recovery until economic confidence picks up.

Growth is slowly returning to the UK and US, while the recession in Europe could be moderating.

But M&A markets have defied expectations, with global volumes down nine per cent and a 35 per cent fall in Europe, the Middle East and Africa so far this year

“The market remains somewhat anaemic. Despite some big headline deals, particularly in the US, volumes are materially down this year,” said Deutsche Bank’s Gavin Deane. “Activity tends to be focused where there is growth. The US is recovering more quickly than Europe and the dollar is appreciating, so it is natural that for US boards, domestic deals may be higher on the agenda.”

Volatility and unpredictability in markets could also be to blame.

“Over and over again we have seen problems in deals when prices move,” said BDO’s Peter Hemington. “To get more deals we need firms trading well and that needs a sustained economic improvement.”