M&A deals slump as credit crunch gets crunchier

The value of corporate deals in the first six months of this year has more than halved, according to new research published today.

Evidence that the issues affecting the global and local credit markets had finally caught up with deal activity across the whole of UK industry came from research outfit Experian.

While the number of deals in the UK fell 10.4 per cent in the first six months of 2008 to 2,972, the value of corporate activity fell from £281bn to £126bn, a 55 per cent slump.

Only three regions across the country - Yorkshire, the South West and the North West - saw year-on-year increases in the number of corporate deals completed.

London saw the largest decline in deals, with corporate activity value down to £59bn from £124bn.

Brian Rarity, strategic consultant at Experian's Corpfin arm, which carried out the research, said: "The level of mergers and acquisition activity is a key barometer of economic health, with strong, buoyant economies generally seeing higher levels of deal making.

"While the credit crunch has deterred many organisations from doing deals and has led to an overall fall in deal numbers, advisors are still involved in transactions in all value bands and commercial sectors."

Rarity said there was also some cause for optimism since the later months of the half-year had seen an improvement in deal values.

"The fact that quarter two 2008 saw an increase compared to quarter one 2008 provides hope for the future. There are still opportunities out there, they are just that little bit harder to find," he said.