Global mergers and acquisitions decline 14% in Q4 2011
London, 21 December 2011 – International M&A volumes decreased by 14% in the final quarter of 2011 compared to Q3 2011 and were down 18% compared to Q4 2010 (note 1) according to the Ernst & Young M&A Tracker, released today. Globally deal values were down 25% in the quarter (note 2) and are now at their lowest level since Q1 2010.
The M&A Tracker is compiled by Ernst & Young and the M&A Research Centre (MARC) at Cass Business School from six different transaction data sources. Quarterly M&A activity levels recorded in Bloomberg, CapitalIQ, Dealogic, Mergermarket, Thomson and Zephyr are consolidated and compared to activity levels in Q1 2010 using a proprietary weighted-average methodology.
As uncertainty about global growth continues to discourage the appetite for risk, Q4 2011 saw a sharp drop in cross-border activity to 30% of all global transactions. The last three quarters of the year have also had historically high proportion of cash only deals reflecting depressed share prices which make stock-financing an unattractive option for bidders.
Automotive was the only sector that saw deal volumes and deal value increase in the quarter although Media & Entertainment, Mining & Metals, Oil & Gas and Power & Utilities all saw a rise in deal value from Q3. Among the worst hit sectors by value of M&A were Asset Management, Banking, Consumer Products and Telecoms who all saw falls of more than 40%.
All parts of the world saw a decline in activity in Q4 compared to Q3 although the fall was more muted by volume in Asia and the Middle East. The biggest fallers by deal value were Central and Eastern Europe and Oceania – both declined more than 50%. Western European M&A continued to drop against the background of the Eurozone crisis. Volumes were down 18% and value 22%, both larger falls than in North America (14% and 21% declines respectively).
Dave Murray, Transaction Advisory Services Markets Leader at Ernst & Young, says: “The decrease in the volume and values of deals globally was primarily driven by continued uncertainty caused by the Eurozone crisis and the knock on effect to the global economy.”
Outlook for 2012
Dave continues: “If the Eurozone leadership can secure a credible funding solution I expect a period of stability will allow deal making to recover.”
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Notes to editors
Note 1: The announced deal volume data for Q4 2011 (cut-off date: 9 December) range from a minimum of 850 transactions reported by Mergermarket to a maximum of 1,350 by CapitalIQ. For the YTD 2011, the announced deal volume data range from a minimum of 4,324 transactions reported by Mergermarket to a maximum of 6,043 by CapitalIQ.
Note 2: The underlying announced deal value data for Q4 2011 (cut-off date: 9 December) range from a minimum of US$243bn total announced deal value reported by CapitalIQ to a maximum of $340bn by BvD (Zephyr). For the YTD 2011, the announced deal value data range from a minimum of $1,371bn total announced deal value reported by CapitalIQ to a maximum of US$1,720 by Mergermarket.
About the Ernst & Young M&A Tracker
The Ernst & Young M&A Tracker was compiled for Ernst & Young by MARC, the M&A Research Centre at Cass Business School from six different transaction data sources. Quarterly M&A activity levels recorded in Bloomberg, CapitalIQ, Dealogic, Mergermarket, Thomson and Zephyr are consolidated and compared to activity levels in Q1 2010 using a proprietary weighted-average methodology.
The Ernst & Young M&A Tracker, weights each database according to the total value of deals in their datasets from the start of the M&A Tracker in Q1 2010. This results in a broad picture of transaction activity. Transaction activity levels are rebased (indexed) to 100 at the base period - Q1 2010, hence a figure of 115 shows a 15% increase compared to base period, and a figure of 85 shows a 15% decrease compared to the base period.
The Ernst & Young M&A Tracker only considers 'change-of-control' deals and excludes privatizations, self-tenders, share buybacks, spin-offs, split-offs and recapitalizations. Transaction deal value has been set to a minimum of $10m. Deal activity is measured from the date of announcement and rumored deals are excluded. Transactions are credited in the country and sector of the target only.
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