M&A market trends

25 January 2010. There is evidence that the German mergers & acquisitions (M&A) market gained ground at a relatively low level in 2009. A survey in the latest issue of the journal M&A REVIEW of the Institute of Management (IfB-HSG) of the University of St.Gallen reveals that the downtrend of the German M&A market continued in the first half of 2009 but that slight upward tendencies were then registered in the second two quarters of the year.

The analysis is based on the data of the HSG’s M&A DATABASE, which has recorded all such transactions concluded in the German-speaking area ever since 1985. The editors of the M&A REVIEW will publish the results in detail on 25 January 2010.

The German M&A market appears to have bottomed out
With approximately 972 transactions in which German companies were involved, the decrease in comparison with the previous year amounted to 18.2 per cent (previous year: 1,190 transactions). All in all, many of the previous year’s trends continued in 2009.

Thus the M&A business was often driven by transactions born out of necessity, so-called “distressed deals”. The trend towards national transactions and the loss of significance of private equity investors continued: a development which might well persist in 2010.

Austrian takeover merry-go-round turning even more slowly
In 2009, the Austrian M&A market, with a mere 197 finalized transactions, was completely in thrall to the global economic crisis. Despite a slight upward trend in the fourth quarter, it caved in to the tune of 35 percent from 299 transactions in the previous year. Thus the number of M&A deals with Austrian participation was more than 50 percent below the value of the top year, 2007, with 416 transactions.

The strong M&A engines of previous years, namely financial and general services (with real estate in particular) are still faltering. Banks are still granting loans on a distinctly more restrictive level. A tight liquidity situation is likely to force many companies to pursue a distinctly more restrictive acquisition policy.

First indications of an upturn in Switzerland
Whereas in 2009, the Swiss M&A market registered a negative development well into the second half of the year, a slight increase in transaction activities managed to raise hopes towards the end of the year. To begin with, the global financial and economic crisis also affected the development of M&A figures in Switzerland.

Thus the number of transactions recorded in the HSG’s M&A DATABASE initially revealed a weak first quarter with 100 deals, but then went on to log two new negative records for the second and third quarters with 90 and 77 deals, respectively.

Even if the increase to 96 in the fourth quarter may be interpreted as a first sign of an improvement in the market situation in comparison with the first three quarters, this level still represents a decrease by more than 11 percent compared to the same period of the previous year.