Daily Management Review

Volume of cross-border M&As falls by 45% in the first half of 2019


According to Refinitiv, in the first half of the year, the global volume of mergers and acquisitions (M&A) amounted to $ 2 trillion, which is 12% less than in the first half of last year. At the same time, the volume of cross-border transactions fell sharply by 45%. In addition, activity in Europe and Asia has been significantly reduced. The M&A market received support only from the USA, where mergers accounted for more than half of the global total ($ 1.1 trillion). Previously, experts warned that trade wars and growing uncertainty among investors could affect the global market for mergers and acquisitions.

Refinitiv's research division, Deals Intelligence, presented results of the global M&A market for the first half of this year. It is reported that transactions totaling $ 2 trillion were announced or concluded around the world. Although this is 12% less than in the same period last year, Refinitiv experts emphasize that the results of the first half of 2019 were the third biggest since 1980, when such statistics began to be published. The second quarter showed an increase of 10% against the first quarter and became the tenth consecutive quarter when the global volume of transactions reached $ 1 trillion.

The relative decrease in the activity of the global M&A market in the first half of the year occurred against the backdrop of a sharp drop in cross-border transactions: their total volume amounted to $ 509 billion, which is 45% less than a year earlier, and is the minimum figure for the last six years. The sharp drop in the volume of cross-border mergers and acquisitions occurred against the background of a significant decline in activity in Europe and Asia. The volume of M&A in Europe amounted to $ 305 billion, which is 56% less than a year earlier; in Asia, the volume decreased by 27% - to $ 338 billion. Only US companies and investors, who focused on their domestic market, supported the global M&A market. The volume of such transactions amounted to $ 1.1 trillion, which is more than half of the world total. The US M&A market in the first half of the year grew by 19% compared to the first half of 2018, showing record activity since 1980. Refinitiv stresses that eight of the ten largest mergers and acquisitions in the world this year occurred in the United States.

The situation on the global market was a direct consequence of the ongoing trade wars and growing uncertainty among investors.
Back in early June, experts tracking the dynamics of M&A in the world warned of such a scenario. “If big deals start to dry up, and their replacement in the face of deals of $ 1–5 billion is not observed, then the second half of the year may be more problematic,” said Mark Shafir, Co-Director of M&A department at Citigroup on June 5, during the New York conference of Bloomberg Invest. “And here everything depends on the level of confidence in the market.”

source: bloomberg.com