ZEW-ZEPHYR M&A Volume-per-Deal Index - Global Record in Mergers and Acquisitions

It is becoming ever harder to find adequate terms for describing the levels achieved in the area of global mergers and acquisitions (M&A). The motivation of top managers does not, however, seem to be dwindling; the number of super deals concluded in 2015 has continued to shoot upwards. Four of the largest ten, or eight of the largest twenty deals concluded in the past decade took place in 2015.

With a transaction volume of 67 billion euros, the acquisition of the American Botox manufacturer Allergan by the pharmaceutical company Actavis plc, in March 2015, was the largest transaction. Since mid-November alone, two further mega deals have been completed. On November 18, German pharmaceutical giant Merck took over the American chemicals and biotechnology corporation Sigma Aldrich, at a cost of 16 billion euros. In December 2015, NPX from Eindhoven made an acquisition of a company in the same sector, the Texan semi-conductor manufacturer Freescale. 

The telecommunications corporation Altice, which has relocated in the Netherlands, made a number of acquisitions this year. November 2014 saw Altice take over the French telecommunications provider SFR at a cost of 14 billion euros. In 2015, Altice focused on the North American cable market. This market currently finds itself, not least as a result of the rapid expansion of the broadband network, in a process of reorganisation. After having acquired the majority share of US cable provider Suddenlink in May 2015 for six billion euros, Altice was set to take over the cable-network branch from Time Warner. The acquisition fell through, but Altice quickly found an alternative. In September 2015, the company announced its acquisition of the American cable corporation Cablevision, with a total volume of 16 billion euros. The deal will be completed by mid-2016, according to Altice.

Small and medium-sized enterprises, however, do not seem to have been caught in a similar buying frenzy. The number of monthly deals has decreased steadily since the beginning of the year; the aggregated monthly total volume for all M&A transactions, however, has risen sharply. This means that fewer acquisitions with a greater total volume are being concluded. This is illustrated by the ZEW-ZEPHYR M&A Volume-per-Deal Index, which measures the average aggregated transaction volume for each month. With 106 index points, June 2015 is the month with the highest average transaction volume since recording began in 2003. Overall, up to October 2015, average monthly deal volumes which were higher than those ever before measured since 2003, were recorded for four months in this year. This is also confirmed by the twelve-month moving average, which has risen steadily since 2010. With its current value of 102.5 index points, the moving average is now at an all-time high (status:  November, 2015)

The current activity in the market is a result of the fact that many financially strong sectors have been undergoing a drastic consolidation process for a number of years. This was put on hold by the financial crisis for some time, but is now being pushed to new highs, driven by sustained falls in tax rates and changes in the market environment. After the outbreak of the financial crisis, it was predominately small and medium-sized businesses which were involved in mergers. Now, it is the sector giants' turn to become active in the area of mergers and acquisitions. Analysts do not expect a reduction in the number of mega deals in 2016.

ZEW-ZEPHYR M&A Volume-per-Deal Index

The ZEW-ZEPHYR M&A Volume-per-Deal Index is calculated monthly by the Centre for European Economic Research (ZEW) and Bureau van Dijk (BvD) and has been tracking the development of mergers and acquisitions completed worldwide since the beginning of 2003. The ZEW-ZEPHYR M&A Volume-per-Deal Index is based on the number and the volume of global mergers and acquisitions recorded in BvD’s ZEPHYR database. The index uses the monthly rates of change in the relation between volume and number of M&A transactions, which are combined and adjusted for volatility and inflation. If the total transaction volume is attributable to a larger number of transactions within one month, the value of the M&A Volume-per-Deal Index decreases, even though the aggregate transaction value remains unchanged.

As a result, the index offers a much more precise picture of the level of worldwide M&A activities than a mere observation of transaction volumes or the number of transactions.

For more information please contact

Sven Heim, Phone +49(0)621/1235-183, E-mail heim@zew.de