BusinessCorporate FinanceM&A activity slumps but value holds up

M&A activity slumps but value holds up

The number of mergers and acquisitions in the UK during the first six months of 2004 slumped by 25% compared to the first half of the previous year, according to research by KPMG.

Link: VCs predict 2004 ‘product frenzy’

The firm said the promised increase in activity for the sector had failed to materialise but pointed out that the value of deals had held up at $77bn (£42bn), compared to $80bn the previous year.

Stephen Barrett, international chairman of KPMG corporate finance, said: ‘Whilst it is encouraging to see no further depreciation in the value of completed activity, the UK’s sizeable drop in deal numbers is a telling sign that recovery is still a way off.’

De-stabilising events including inflationary oil prices, an increase in the cost of capital following a turn in the US interest rate cycle and large exchange rate moves have all contributed to disappointing deal numbers world-wide, added Barrett.

But KPMG said it expected a 54% upturn in the value of global activity to follow, boosted by a number of blockbuster deals announced earlier in the year that have yet to close.

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