ZEW-ZEPHYR M&A Index Germany - Positive Signals for Mergers and Acquisitions

After a long dry spell, the German M&A market is showing a moderate upward trend again. Having ranged at a level of 50 points in August 2013 – the lowest level since October 2011 –, the ZEW-ZEPHYR M&A Index Germany exceeded the 100-points mark in January 2014 (103 points) for the first time since January 2010. Against the backdrop of rumours about upcoming mergers and acquisitions, signs are that dynamics on the German M&A market will be further increasing. These are the findings of calculations by the Centre for European Economic Research (ZEW) based on the database of Bureau van Dijk (BvD).

The 12-month moving average of the index, however, does not yet reflect this positive development. In 2013 the moving average was fluctuating between 69 and 72 points and has reached a value of 71 points in January 2014. Increasing by five points, the 12-month moving average is thus currently only slightly higher than in January 2013.

While the number of mergers and acquisitions increased only slightly in the past year, the aggregate volume of deals with a known transaction value has grown considerably to EUR 26.5 billion, the highest level since 2009.

The number of rumours as well as the underlying estimates concerning transaction volumes are a reliable indicator for the future development of the M&A market. The rumours concerning upcoming mergers and acquisitions back the forecast that the German M&A market will experience a revival in the near future. In 2013 the number of rumours has increased by 23 per cent compared to the previous year. The estimated transaction volumes are in line with this tendency: the aggregate estimated transaction volume of all rumours taken together has doubled from EUR 24 billion in 2012 to EUR 48 billion in 2013.

For more information please contact

Florian Smuda, Phone +49(0)621/1235-233, E-mail smuda@zew.de

The ZEW-ZEPHYR M&A Index for Germany

The ZEW-ZEPHYR M&A Index was developed specifically for Germany and has been tracking the development of mergers and acquisitions since 2000, based on the Zephyr database by Bureau van Dijk (BvD). The ZEW-EPHYR M&A Index for Germany is calculated using the number of M&A transactions in Germany, only factoring in mergers and acquisitions of German firms. The origin country of buyers or partners does not play a role in the calculation. This means that both German and foreign buyers, but only target firms located in Germany, are taken into account.

In particular, macroeconomic conditions like the economic development or the development of financial markets determine M&A activities. Based on an empirical study, the forecast of M&A activities in Germany is calculated by means of the OECD Composite Leading Indicator (CLI) for Germany, the long-term level of interest rates, the development of DAX and the number of rumours regarding future mergers.