M&A activity has fallen to its lowest weekly level since the worst point of the financial crisis in April 2009, new data shows.
Statistics from Refinitiv reveal that deals activity last week totaled just $12.5 billion. The total value of M&A deals in the first quarter of this year was down 28 per cent on a year ago to $698 billion, the lowest level for an opening quarter since 2016.
Meanwhile, the number of transactions worth more than $10 billion also fell sharply in large part due to a sudden drop in US activity.
The coronavirus pandemic has meant that corporate share prices have plunged and company leaders have switched their attention to saving their own companies rather than acquiring other businesses.
According to a report in the Financial Times, Leon Kalvaria, chairman of the institutional clients group at Citigroup, said it was anticipated that M&A would remain at close to a standstill in the short term as most companies considering acquisitions have put deals on hold. “Everyone is thinking about their employees and customers first,” he said. “Few companies will be doing cash deals in this environment and private equity players will focus more on managing their portfolio companies before starting to do deals.”
Year on year, US M&A activity dropped 51 per cent to $253 billion in the first quarter of the year. European volumes increased 51 per cent to $232bn during the period, which was partly attributable to an increase in private equity acquisitions and Aon’s acquisition of broker Willis Towers Watson for $30 billion. However, the majority of the European deals took place before the continent felt the effect of the coronavirus pandemic.