ZEW-Zephyr M&A-Index - Hope of a Quick Recovery of Worldwide Mergers and Acquisitions Is Illusory

The ZEW-Zephyr M&A-Index declines to 110 points in March 2010, standing above its starting point of 100 points in January 2000. However, it now stands considerably below its long-time average of 126 points. In December 2009, the index stood at 134 points.

"Worldwide activities in mergers and acquisitions (M&A) considerably decreased in March 2010. We expect that the index will not return to its level which was reached at the beginning of 2010 (moving average of 140 points) any time soon", says Dr. Christoph Grimpe, Senior Researcher at ZEW. "Therefore there can be no talk of an ongoing recovery of the M&A market." The ZEW-Zephyr M&A-Index is calculated every month by the Centre for European Economic Research (ZEW) and Bureau van Dijk (BvD). The index tracks the development of mergers and acquisitions transactions conducted worldwide.

Despite the fact that the index again decreased considerably in the first quarter of 2010, the worldwide M&A activities are bottoming out. Provided that the overall economy is going to recover in the next few months, there will be new impetus to the worldwide M&A activities. "It is also encouraging that in the first quarter of 2010 sales were made whose value exceeded minority holdings. This was not the case in the last five quarters", says Mark Schwerzel, International Director BvD.

The ZEW-Zephyr M&A Index is calculated by the Centre for European Economic Research (ZEW) and Bureau van Dijk (BvD) and tracks the development of mergers and acquisitions transactions conducted worldwide since 2000. The calculation is based on both the number and the volume of mergers and acquisitions concluded worldwide, as recorded in BvD’s ZEPHYR Database. The index uses the monthly rates of change of both the volume and value of M&A transactions, combined and adjusted for volatility and inflation. As a result, the index offers a much more precise picture of the level of M&A activities in the world than can be attained by observing transaction values alone. The reason for this is that a firm's value on the stock exchange has a strong influence on the transaction value, particularly as many acquisitions are paid for by means of an exchange of shares. Consequently the share prices could have a disproportionately strong influence on estimating the trends in M&A transactions. If, however, the total value is spread over a larger volume of transactions within a month, the value of the M&A Index increases although the aggregate transaction value remains unchanged.

For further information please contact

Dr. Christoph Grimpe, E-mail: grimpe@zew.de