ZEW-ZEPHYR M&A-Index - Worldwide Mergers and Acquisitions Still Bottoming Out

During the second quarter of 2010, worldwide M&A activities have still not yet recovered from their sharp decline following the outbreak of the financial crisis in 2008. The ZEW-Zephyr M&A-Index stands at 118 points in June 2010, standing above its starting point of 100 points in January 2000. However, it is still considerably below its long-time average of 126 points. By the end of the first quarter 2010, the Index had reached even 123 points. "Despite positive economic forecasts, M&A activities have not taken off yet", says Dr. Christoph Grimpe, Senior Researcher at ZEW. "There are no signs for an immediate recovery either." The ZEW-Zephyr M&A-Index is calculated every month 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).

During the second quarter of 2010, 1,553 transactions with a total value of 208 billion Euro had been completed worldwide, compared to 1,693 transactions with a total value of 200 billion Euro in the first quarter. "Despite the high liquidity, investors follow a wait and see strategy and watch out for attractive opportunities. This delays a substantial recovery of the worldwide M&A market. The risk of the market anticipated by the investors will be decisive for the future development", says Mark Schwerzel, International Director BvD. "Until then, strategic takeovers and trade sales will dominate." Trade sales are the sale of a mostly young firm by the management and participating private equity or venture capital firms to a strategic investor.

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