Worldwide M&A volume drops a quarter in 2012

GLOBAL M&A volume has fallen by a quarter so far this year compared to the same period in 2011, according to research unveiled yesterday.

Data from Thomson Reuters shows that worldwide M&A volumes have hit just $1,002bn (£640bn) so far in 2012, a decline of 25 per cent, as the ongoing uncertainty surrounding the Eurozone crisis took its toll on investors.

“If M&A activity is confidence driven then it is hardly surprising to see depressed volumes in the first half of 2012,” explained Leon Saunders Calvert, head of global deals at Thomson Reuters. “Higher risk deal making in particular has suffered, including private equity buyouts and cross border acquisitions, which in turn has had consequences for emerging markets heavily reliant on foreign investment.”

“Governments are playing a significant and direct role in driving activity and indeed it is the politicians, whom the market is dependent upon to create genuine deal making opportunities through the healthy resolution of the Eurozone crisis. The success, or otherwise, of these talks will determine the M&A pipeline for the rest of the year and into 2013.”

Banks are fighting harder than ever for a reduced number of deals but Goldman Sachs once again topped the table for M&A advisory work in the first six months of this year.

Goldman has been involved in deals worth $273bn while Morgan Stanley, its nearest rival, could only manage $215bn. Japanese bank Nomura was the biggest riser year-on-year, jumping from 14th place to 8th.

On a regional basis the Americas led the way, accounting for 41 per cent of global activity in the year-to-date period, ahead of Europe on 35 per cent.

But this masks sluggish US performance, where activity in the first half of 2012 totalled $299bn, down 44 per cent on the same point last year. This represents the slowest start to the year for US deal making since 2003.

Energy and Power continues to be the dominant sector and was responsible for a fifth of all transactions by volume. Materials and Financials were in second and third place respectively.