Thomson Reuters gave The Am Law 200 a nice New Year’s present Tuesday: its report that global deal volume dropped by a full one-third in 2008 and looks to keep falling next year. Perhaps Am Law firms heavily invested in M&A work might want to pre-emptively cancel their 2009 holiday parties.
The bad news reads like this: total deal volume dropped about 32 percent to $2.89 trillion, the lowest annual number since 2005. Fourth-quarter numbers were even worse, with M&A volume dropping 44 percent worldwide over the last three months compared to the same period last year; U.S. deal volume plummeted 55 percent in the same time frame.
Here’s another grim number: the more than 1,100 agreed-upon deals that collapsed in 2008 represent a record. For those with short memories, the big deals-gone-sour included BHP Billiton’s attempted takeover of mining rival Rio Tinto and the failed private equity buyout of BCE in Canada.
Private equity-sponsored deals fell off the map in 2008, Reuters reports, declining by 72 percent to a five-year low.
Hostile takeovers represented the only bright spot, something experts say is typical in down periods when companies that are still strong look to feast on the weak.
The highlight in this category, of course, was InBev’s $52 billion takeover of Anheuser-Busch, a deal that helped JPMorgan Chase & Co. clinch the number one rank among financial advisors in European deals — a development that surprised Reuters analysts. (Side note: Morgan Stanley fell to fifth among financial advisors in the rankings, down from the No. 2 spot last year).
So everything will get better next year, right? Wrong, according to Paul Parker, chairman and head of global M&A at Barclays Capital. Parker told Reuters he expects deal volume to drop another 30 percent next year to about $2 trillion.