Companies are striking fewer deals and the value of mergers and acquisitions (M&A) is falling, according to a report by magic circle firm Allen & Overy. The value of global deals fell by 12% to $2tn in the first half of 2019 compared with the same period last year and the volume of deals dropped by 16%, the firm’s M&A insights report reveals.
In western Europe the value of deals plunged by 57%, meaning the region now accounts for just 14% of total transactions.
Allen & Overy said the decline is part of ‘a downward trend consistent across most sectors and regions, as political and economic issues impact boardroom confidence’. Despite deal-makers’ loss of appetite, however, 2019 still delivered the third strongest first half on record, the report notes.
Dirk Meeus, co-head of global corporate practice, said: ‘This latest report confirms that the anticipated repercussions of geopolitical uncertainty are now taking their toll on deal-making appetite.’
The US continues to bolster the M&A scene, with deal value up almost 20% to $1.1tn.
Seth Jones, M&A partner based in London, said: ‘Globally, the public M&A market has been flattered by a small number of very large deals in the US. UK deals are down on last year, but the UK is generally regarded as undervalued in comparison with other developed markets and we are seeing an increase in private capital being deployed in public takeovers, with a number of deals becoming competitive.’