Downward Trend of Worldwide M&A Activities Continues in the First Half of 2013

Global M&A activities (mergers and acquisitions) decreased again in the first half of 2013. The ZEW-ZEPHYR M&A Index reflects the completed mergers and acquisitions worldwide. Its current downturn has started in mid-2011. In Germany, by contrast, the situation is different: here, the number of mergers and acquisitions had already bottomed out in 2011. Meanwhile, a glimmer of hope has emerged for the worldwide M&A activities: the number of rumours about future deals circulating on the market has increased significantly. These are the results of calculations by the Centre for European Economic Research (ZEW) based on the database of Bureau van Dijk (BvD).

In June 2013, the ZEW-ZEPHYR M&A-Index ranged at 99 points. Following the short recovery to 114 points in May 2013, the index thus dropped below its initial value of 100 points in 2000 again. By the end of 2012, the indicator had closed at a comparably high level of 130 points before subsiding once more in February 2013.

In the first six months of this year, the number of completed deals worldwide declined by 18 per cent compared to the first half of 2012 and by 21 per cent compared to the second half of 2012. In the corresponding period, the cumulated transaction volume fell by 12 and 15 per cent respectively and reached a total of 434 billion euros. The sustained downward trend is also reflected in the 12-month moving average which has been decreasing continuously since mid-2011. The German M&A trend is hence deviating from the global M&A development: in Germany, the M&A-Index had already bottomed out at the beginning of 2011 and has since been on a low but stable level. "The M&A Index is thus reflecting the comparably robust economic situation in Germany," says Mark Schwerzel, International Director BvD.

Meanwhile, there are first signals suggesting a possible stabilisation of global M&A activities in the near future. The number of rumours about mergers and acquisitions on the market indicates such a change of trends. Rumours are considered to be a suitable indicator for the number of deals that will actually be realised in the future. In the first six months of 2013, the number of rumours has grown by seven per cent compared to the second half of the previous year, and by six per cent compared to the first half of 2012. The associated potential transaction volume has also considerably increased by 50 and 119 per cent respectively. These figures are a reason for hope that major deals will be realised and the negative trend will be slowed down in the coming months.

For more information please contact

Florian Smuda, Phone +49 621/1235-233, E-mail smuda@zew.de

ZEW-ZEPHYR M&A-Index

The ZEW-ZEPHYR M&A-Index is calculated monthly by the Centre for European Economic Research (ZEW) and Bureau van Dijk (BvD) and has been tracking the development of mergers and acquisitions completed worldwide since the beginning of 2000. The ZEW-ZEPHYR M&A Index is based on the number and the volume of global mergers and acquisitions recorded in BvD’s ZEPHYR database. The index uses the monthly rates of change of both volume and value of M&A transactions, which are being combined and adjusted for volatility and inflation. As a result, the index offers a much more precise picture of the level of worldwide M&A activities than a mere observation of the transaction volume. The reason for this is that a firm's value on the stock exchange has strong influence on the transaction value, in particular because many acquisitions are paid for by an exchange of shares. Stock prices could thus have disproportionately strong influence on the assessment of the development of M&A transactions. If the volume is attributable to a larger number of transactions within one month, however, the value of the M&A-Index increases even though the aggregate transaction value remains unchanged.