A 40 percent plunge in global merger and acquisition (M&A) activity for the first six months of 2009 is not unexpected, according to Brisbane-based law firm Allens Arthur Robinson.
Allens Chairman Ewen Crouch says the current climate is unsuitable for amalgamations, as many businesses struggle to keep afloat.
“It's a dramatically different economic environment than the one dealmakers were operating in at the start of 2008,” Crouch says.
“The extent of the drop-off will surprise no one and the debate now is really about when M&A activity will pick up,” he says.
Figures released by Thomson Reuters today place Allens among the top five law firms worldwide for announced M&A activity for the first six months of the year.
Data also shows announced M&A activity dropped 40.2 percent worldwide in the first six months of 2009, with Asia-Pacific deals down by 28.4 percent.
The United States was the hardest hit, with deal volume dropping by just under 50 percent.
“Over the last six months we've been working on global M&A transactions involving organisations such as Rio Tinto and others. These global deals have kept firms such as ours busy but localised M&A activity in Australia, Asia and elsewhere is still very sluggish,” Crouch says.
He says a swift turnaround is not going to be seen anytime soon, but predicts a slow and steady increase.
“We expect a pick-up in M&A activity in the next six months as companies with strong balance sheets target those that continue to struggle because of the downturn.”