M&A activity slows down

Jan. 25, 2008 - PRLog -- Large companies are delaying deals in the face of the slump in equity markets, it has been reported.

According to data from Dealogic this year the worldwide volume of deals has dipped 17 per cent, when compared with the same period last year, to $116 billion.

This is the least active start to a year in the markets since 2002, the Financial Times reports.

The slowdown can be attributed in part to firms struggling to value takeover targets and chief executive officers wary of overpaying for companies, Tony Burgess, global head of M&A at Deutsche Bank, said.

He explained "When CEOs start to see their own share price fall, they are less likely to do deals as confidence is inevitably shaken. More generally, no one is going to risk buying something now when it could be even cheaper in a few months' time."

However, fears that this marked a long-term downturn in merger activity were dismissed by Sebastian Grigg, head of UK investment banking at Credit Suisse.

"Although the price of risk has clearly changed, companies still have the need to grow. This is a pause for mergers rather than a stop," he said.

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