M&A Plummets By a Third As Debt Crisis Slams Private Equity Shops

The FT is reporting that the total value of mergers and acquisitions is down by 1/3rd to $1.86 trillion for the first half of 2008. Big deals and private equity investments accounted for the lion’s share of the decrease. FT:

The volume of deals announced by private equity investors plunged 78 per cent to account for just 6 per cent of the global M&A market, the industry’s lowest share since 2001. The credit crunch continues to render buy-out investors unable to secure the debt they need to buy expensive assets.

The environment improved in the second quarter however, with big deals in telecommunication boosting volumes significantly. Some are calling for a turnaround:

Six corporate mega-deals above $20bn, mostly in the telecommunications sector, doubled the first quarter’s mega-deal volume. Bankers attributed the jump to pent-up demand from companies that have wanted certain assets for years but had faced too much competition from private equity.

“We’re very, very busy right now. There is evidence of a turn,” said Jimmy Elliott, JPMorgan global M&A head, who was surprised corporate buyers had not sprung into action sooner.

Goldman Sachs continued to lead the pack in M&A, with $1 billion in revenue and a 10% market share. JP Morgan and UBS followed with $741 and $708 million in revenue respectively.

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