M&A volumes down in 2012

Julian Harris
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GLOBAL market worries have continued to knock merger and acquisition activity at the start of the year, according to a new study released this morning.

Internationally, the number of M&A deals fell by 24 per cent in the opening three months of the year compared to the final quarter of 2011, Ernst & Young has calculated.

Compared to a year earlier, M&A volumes at the start of 2012 were down 26 per cent.

Yet the total value of deals declined at a more modest rate – 13 per cent – as some large deals were pushed through.

“The market uncertainty of late last year has clearly impacted transaction activity in quarter one of 2012,” commented Jon Hughes of Ernst & Young.

“That said, the small upswing in average deal values could indicate an increase in confidence amongst buyers – who whilst still cautious about undertaking transactions, are more willing to push through larger deals,” he added.

Globally, the average deal in the first quarter of this year rose to $296m (£186.5m), up 14 per cent from $260m in the final three months of last year.

The trend was seen clearly in the UK, where the volume of deals dropped by 14 per cent quarter on quarter, yet the total value actually grew 20 per cent over the same period. The average value of a deal in the UK shot up by 41 per cent, from $189m to £264m.

The UK bucked the international trend of a decreasing level of deals funded entirely by cash. While just over half (55 per cent) of global deals were 100 per cent financed by cash, the figure in the UK was a far-higher 91 per cent.

Activity across international borders has continued to hold up despite economic woes, according to the data which is compiled from six separate leading market sources.

Cross-border M&A activity jumped by 32 per cent in the first quarter of 2012, while cross-regional deals were also up by 20 per cent.