M&As to remain low until the third quarter

Jan 28 2009 by Peter McCusker, The Journal

THIS year will see a continued fall in global mergers and acquisitions but deal activity should slowly return late in the year as liquidity improves and value is recognised in certain sectors, says a new report.

KPMG Corporate Finance’s Global M&A Predictor – a forward looking survey of 1,000 leading companies – showed a significant fall in 12-month forward corporate valuations signalling a decreasing capacity to do deals.

Stephen Barrett, corporate finance international chairman at KPMG, said: “Findings from our latest predictor confirm our view that 2009 will be a very subdued year for M&A activity.

“We expect global deal volumes to continue to fall through to Q3 and, with less liquidity in the market and reduced debt market liquidity, appetite and capacity for doing deals will continue to decline.

“However, our detailed analysis, coupled with historic M&A cycle trends, leads us to believe there are indications that the corner may well be turned late in the second half of this year.

“I believe that those people who ended 2008 feeling battle fatigued have started the New Year with a desire to kick-start the deals market. I also believe that the market players to watch will be those able to execute cash deals.”

Figures for last year’s deals recently published in Dealmakers showed the value of deals in the North East had fallen from £6bn to £1bn.