Alistair Asher Head of FIG, Allen & Overy, listens during the Reuters Global Mergers and Acquisitions Summit, in London April 6, 2011.
Merger and Acquisition has fallen to its lowest since four years owing to the global economic crisis, at the end of the half year in 2013.
According to the Allen Overy M&A Index (research based on the global deals worth more than US$100m), there is a 23% decrease in the volume of deals with a 33% decrease in the value of deals in the first quarter of the year compared to the same in the previous year.
Owing to the prolonged recession affecting the European companies, there haven't been many transactions although the slowly growing United States approaches a long anticipated growth in M&A transaction, despite the volatility of the market.
According to the Thomson Reuters, global deal volume has dropped to $978.8bn (€ 751.2bn/ £640bn) in the first six months down from $1.07 trillion a year earlier.
In Europe, the deal volume slammed to 43% to a 16 year low with just 22.6% of worldwide transactions, while in the Asia-Pacific deal volume declined to 3% reported Reuters on Friday.
In the last two quarters of 2012, US have seen increase in the domestic transactions which continued in the first quarter of this year as well. The M&A index of Allen Overy also indicates potential growth of Chinese market given that now the political direction of the country is clearer. On the other side, despite the sliding yen Japan remained as an attractive target, said Andrew Ballheimer, co-head of the global corporate practise of Allen & Overy.
The equity market in US has fallen in recent weeks with growing concern over Federal Reserve, that might slow down its bond-buying stimulus later this year. The interest rates have fallen to all time-low in US helping cheap M&A deals.
One of the acute problems in M&A transactions has been valuation of the deal, the dealmakers told Reuters.
"The gap between buyers and sellers is wider than I've ever seen," Michael Carr, head of America's M&A at Goldman Sachs told Reuters.
"Shareholder reaction is one factor governing CEO confidence as the CEOs worry more than ever about how their deals and transactions are going to be perceived by existing shareholders, new shareholders and regulators," Carr added.
The telecom and healthcare sectors have been the sharp target of the year with various large scale transactions like the Liberty Global acquiring Virgin Media earlier this year; deal worth of $25 bn (£16.34bn/ € 19.18bn).
Other than that, earlier this week two of the largest telecom deals happened with Sprint Nextel taking over Japan's Softbank for $21.6bn (€16.6bn/ £14.12bn) and Vodafone Group declaring to buy German's largest cable operator Kabel Deutschland for $10bn (£6.5bn/ €7.7bn).
Besides, the healthcare deals volume also climbed by 30% to 93.6bn (£61.2bn/ €71.8bn) in the first half of the year.
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