Global M&A Value Slides to Lowest Mark Since 2009

Outlook for the remainder of the year looks "subdued."
By MainStreet Team ,

By Hal M. Bundrick

NEW YORK (

MainStreet

)--Global merger and acquisition activity slipped below the $1 trillion mark for the first time since 2009, with value sagging 12% for the first half of 2013 compared to last year, according to Ernst and Young. Without a solid first-half performance in the U.S., the news might have been worse. U.S. M&A surged 43% from 2012 - contributing nearly half (46%) of total global deal value.

"Continued caution was the prevailing M&A sentiment in the first half of 2013," says Pip McCrostie, EY's Global Vice Chair of Transaction Advisory Services. "The Eurozone crisis continues to impact nine global companies in every ten and, as we predicted earlier this year, this has translated into a reduced appetite for M&A - even in many formerly deal-hungry emerging markets. The fundamentals for M&A are strong in terms of cash and credit availability, but we expect limited deal activity will continue through 2013. Large corporates recognize there is a favorable environment for deals and are actually expecting more M&A to happen - but by others. Most are adopting a 'you first' approach, unwilling to take the plunge themselves."

Read: How a Secret Formula Put Beverly Hills in a Beautiful Bottle

The U.S. remains the most active in M&A value with $455 billion in deals through the first six months of 2013. China made its first appearance as the runner-up with $80 billion worth of deals; almost double that of the UK, in third place with $41 billion.

"China's growing global economic influence has been a re-occurring theme over the past decade," says McCrostie. "Now the numbers tell their own story -- the shift in the balance of M&A power has accelerated since the financial crisis and will likely become even more pronounced in the second half of 2013."

Read: Camera-to-Credit Card the Next Mobile Trend?

Globally, mining and metals (-22%), and oil and gas (-18%) were the sectors declining the most in activity. Meanwhile, large deals, primarily in the U.S., saw certain sectors make big gains in terms of value. Consumer product deals were up $41 billion, a 55% increase. Media and entertainment was up 44%, telecoms rose 72% and asset management was up 58%.

"The outlook for M&A in 2013 remains subdued," says McCrostie. "There are a number of changes that need to happen for M&A to see a sustained pick-up and return to growth. Will we see them in 2013? It's unlikely, but as with any market, sentiments can change rapidly."

--Written by Hal M. Bundrick

Read: Financing Fertility Options in the U.S.

Loading ...