Breakout in global M&A yet to come, says Baird’s report
The anticipated breakout in global M&A activity has yet to materialize, according to a report published today by asset management company RW Baird on European, US, Asian and global M&A activity.
Through April, the global M&A deal count was 5.4% below the prior-year level.
In the first four months of the year, the global middle market registered a 12.6% decline in the deal total and a 19.4% drop for dollar volume.
In Europe, the number of transactions declined by 22.9% to 706 in April, the lowest total since August 2009.
However, aggregate deal values increased by 23.7% to $71.3bn, driven by the billion-dollar-plus deal segment. The report says M&A activity in Europe continues to be dampened by lagging economic conditions.
Concerns about government policies remain elevated, as recent elections in France and Greece cast doubt on the sustainability of austerity programs intended to address sovereign debt burdens.
Meanwhile, market participants remain focused on credit conditions in Europe, where stability is needed to prevent the type of financing shutdown seen in 2011.
“The recent pick-up in volatility has dampened planned equity offering activity, thereby limiting capital available for future M&A transactions,” Baird said.
The report added that unless another flare-up for Europe’s sovereign debt situation short-circuits financing activity, the pieces remain in place for an upturn in the global M&A market.
“Positive variables include cash-rich balance sheets for corporates facing a low organic growth backdrop, pressure on financial sponsors to put committed capital to work and to generate exits, accessible credit markets, and prospective tax increases following the November elections”.