ZEW-ZEPHYR M&A-Index - Slump in M&A activities in the first quarter of 2009

Worldwide M&A activities have decreased considerably in the first quarter of 2009. The ZEW-ZEPHYR M&A-Index fell from 139 points in December 2008 to 108 points in March 2009. Thus, the index stands considerably below its long term average of 129 points.

The index’ lowest level for more than five years was reached in February 2009. At that time the ZEW-ZEPHYR M&A-Index was ranked at its launch-level of 100 points in January 2000. The index is published by ZEW Centre for European Economic Research, Mannheim (Germany), and Bureau van Dijk Electronic Publishing (BvDEP). It is calculated monthly and tracks the development of mergers and acquisitions transactions conducted worldwide.

In the next few months, a further reduction of M&A activities is expected as there are currently only few transactions in the planning and implementation stage. "But the situation can change. Particularly for economically sound companies, there are currently many opportunities for takeovers because of low firm valuations," says Dr. Christoph Grimpe, Senior Researcher at the ZEW. "Acquisitions had in the past already been financed with substantially less capital", says Marc Schwerzel, International Director BvDEP. "This is shown in a comparison of buyers’ financial ratios in the last six months and the last two years using the ZEPHYR and ORBIS databases."

The ZEW-ZEPHYR M&A-Index, which ZEW Centre for European Economic Research and Bureau van Dijk Electronic Publishing (BvDEP) calculate every month, tracks the development of mergers and acquisitions transactions concluded worldwide from the start of the year 2000 onwards. The ZEW-ZEPHYR M&A-Index is calculated on the basis of both the number and the volume of mergers and acquisitions concluded worldwide, as recorded in BvDEP\'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 activity 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. The consequence of this is that the share price could have a disproportionately strong influence on estimations of the trends in M&A transactions. If, however, the total value is spread over a larger volume of transactions within the month, this increases the value of the M&A Index, although the aggregate transaction value remains unchanged.

For further information please contact

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