ZEW-ZEPHYR M&A-Index - Mergers and Acquisitions at Record Low in 2009 – Rebound Emerging in 2010

Worldwide activities in mergers and acquisitions (M&A) collapsed dramatically in 2009. Only about 18,500 mergers and acquisitions with majority interests and a total capacity of almost one trillion euro took place in 2009. Therefore, 2009 was the year with the lowest turnovers in this decade. In 2007, more than 22,800 mergers and acquisitions with a total capacity of 1.8 trillion euro took place due to the good economic situation. "In total, the M&A activities increased considerably in the forth quarter of 2009 and therefore improved the bad balance sheet of 2009", explains Dr. Christoph Grimpe, Senior Researcher at ZEW.

The ZEW-ZEPHYR M&A-Index climbed to 128 points in December 2009. At the end of the forth quarter of 2009, it stands considerably above its starting point of 100 points and above its long-time average of 126 points. "These developments raise hopes for 2010", says Grimpe. In May and August 2009, the Index reached its low the last time and stood at 95 and 97 points, respectively. The ZEW-ZEPHYR M&A-Index is calculated monthly by the Centre for European Economic Research (ZEW) and Bureau van Dijk (BvD). The index tracks the development of mergers and acquisitions transactions conducted worldwide. (Further information on how the Index is calculated can be found at the end of press release).

The increasing positive development in worldwide M&A activities confirms an overall economic rebound noticeable at the beginning of 2010. The rebound will positively influence M&A transactions in the next few months. "We expect an increase in M&A activities, especially in the financial sector", says Mark Schwerzel, International Director BvD. "Due to EU requirements, many credit institutions having received subsidies by the government have to sell investments which are not absolutely necessary for their future business activities."

The ZEW-ZEPHYR M&A-Index is calculated by the Centre for European Economic Research (ZEW) and Bureau van Dijk (BvD) and tracks the development of mergers and acquisitions transactions conducted worldwide since 2000. The calculation is based on both the number and the volume of mergers and acquisitions concluded worldwide, as recorded in BvD’s ZEPHYR Database. The index uses the monthly rates of change of both the volume and value of M&A transactions, combined and adjusted for volatility and inflation. As a result, the index offers a much more precise picture of the level of M&A activities in the world than can be attained by observing transaction values alone. The reason for this is that a firm's value on the stock exchange has a strong influence on the transaction value, particularly as many acquisitions are paid for by means of an exchange of shares. Consequently the share prices could have a disproportionately strong influence on estimating the trends in M&A transactions. If, however, the total value is spread over a larger volume of transactions within a month, the value of the M&A Index increases although the aggregate transaction value remains unchanged.

For further information please contact

Prof. Dr. Christoph Grimpe, E-mail: grimpe@zew.de