What a difference a year makes.
With the virtual collapse of credit markets and the drying up of money from private-equity firms, 2008 turned out to be a very slow year for mergers and acquisitions.
Globally, there were 37,445 deals, totaling $3.3 trillion, down 29 percent from record volume in 2007, according to Dealogic, a data research firm in New York. In the United States the value of deals dropped 29 percent to $1.1 trillion.
“There were record highs in 2006 and 2007 in terms of the volume of deals,” said Josh Lerner, a professor of investment banking at Harvard Business School. “What ended up happening with the credit crunch is that people couldn’t get access to debt financing at the very generous, cheap terms they had before.”
The value of mergers and acquisitions was largest in the U.S. financial sector as the credit crisis spurred linkups. The sector did $157.9 billion in deals, with Bank of America’s $44.4 billion acquisition of Merrill Lynch accounting for the lion’s share. The health-care and consumer- products industries, which did $138.6 billion and $135.6 billion in deals, respectively, ranked next, according to Deal ogic. The company’s data extend to Dec. 22.
In the United States, the number of buyouts — deals undertaken by private-equity firms — dropped roughly 32 percent to 635 deals valued at $61 billion, from 930 deals valued at $375 billion in 2007.
Greg Peters, chief credit strategist at Morgan Stanley, said the declines show how challenging the environment is. “Deals are typically debt financed,” he said. “With debt markets essentially frozen, the ability to do a transaction just isn’t there.”
