M&A Involving German Firms Has Stalled
M&A Index
After a strong start to the year 2017, the number of mergers and acquisitions (M&A) involving German firms has fallen. This trend is clearly discernible in the ZEW-ZEPHYR M&A Index, which reflects the number of M&A transactions conducted in Germany on a monthly basis. While back in January 2017, the index reached 145 points – its highest level since January 2009 – by July, it had fallen to 75 points. This seems to indicate that the continuing upward trend in mergers and acquisitions involving German firms has stalled. These are the findings of the latest M&A report carried out by the Centre for European Economic Research (ZEW), Mannheim, on the basis of the Zephyr database of Bureau van Dijk.
The twelve-month moving average of the ZEW-ZEPHYR M&A Index also dropped to 87 points, its lowest level since October 2015. Furthermore, the average transaction volume for the current year is considerably lower than the average from previous years. “After the strong period of growth in recent years, this cooling-off in M&A activities that we are seeing now could be an early indicator of the economy entering a saturation phase,” says Niklas Dürr, researcher in the ZEW Research Group “Competition and Regulation” and project leader for the M&A Report, which is produced jointly by ZEW and Bureau van Dijk. “You might suspect that the party is over.”
As a result of big capital gains on stock markets worldwide, acquisition targets may be over-valued. “Potential investors could be more hesitant with their buying decisions,” says Dürr. Up until early September 2017, it was also not clear how the European Central Bank would decide on the purchase of government bonds. A more restrictive monetary policy from the ECB would have lead to capital being withdrawn from the stock markets, lowering the price of potential acquisition targets. “This expectation has ultimately led to a reduction in M&A activities involving German firms,” explains Dürr.
ZEW-ZEPHYR M&A Index Germany
The ZEW-ZEPHYR M&A Index measures the number of M&A transactions completed in Germany each month. It considers only mergers and acquisitions conducted by and with German companies. No differentiation is made with respect to the country of origin of the buyer or partner involved. This means that German as well as foreign companies, acting as buyers in transactions, are taken into account, while all target companies considered are active in Germany.
The ZEW-ZEPHYR M&A Index Germany is created by ZEW and Bureau van Dijk on the basis of the ZEPHYR data base. ZEPHYR provides information on more than 1.5 million M&As, IPOs and private equity transactions worldwide.
For further information please contact:
Niklas Dürr, Phone +49 (0)621/1235-386, E-mail niklas.duerr@zew.de