Global M&A deals up, but nowhere near '07 high

Global merger-and-acquisition deal volume up 3% in 2010, hitting US$1.9 trillion in value, up 26% on 2009.

But this is significantly below the all-time yearly high of US$4.7 trillion recorded in 2007, according to Ernst & Young.

2010 began with greater optimism, as corporations and PE firms had significant cash on hand and credit became increasingly more available. However, corporations moved cautiously as the uncertain global economic picture – caused by austerity measures, increasing taxes, currency conflicts and regulatory concerns, among other issues - delayed them from entering the market in a more robust way.

Global M&A activity, which trended downward during the first half of 2010, saw a slight resurgence in the third quarter when four of the year's ten top deals5 were announced. This was followed by a slow fourth quarter as European sovereign debt concerns deepened, driving down the value of Europe-bound deals to a five year low6, putting a drag on global M&A. Overall, there has been a slight recovery led by PE and emerging market deals.

Pip McCrostie Global Vice-Chair for Ernst & Young Transaction Advisory Services, says: "The past year was characterized by a two-speed recovery, with momentum building in emerging markets versus limited deal activity in developed markets."

Emerging markets witnessed a surge in M&A activity in 2010 with inbound and outbound BRIC (Brazil, Russia, India and China) deal value reaching almost US$372 billion, up more than 46% over 20097.