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2012 M&A review



Despite a generally subdued feeling when it came to mergers and acquisitions over the past 12 months, Thomson Reuters figures show that 2012 deal values were slightly up on 2011.

The data for 2012 M&A activity shows that 2012 was not a strong year, but that activity is growing steadily and the general consensus among analysts is that this trend is likely to continue. The total value of deals last year was $2.6 trillion, up 2 per cent on 2011’s deal value total.

The fourth quarter also turned out to be the most active, with values of announced deals increasing 53 per cent on deal values the previous quarter.

Emerging markets and cross-border deals are still driving much of the activity, along with spin-offs and divestitures, according to Thomson Reuters. More than a quarter of the deals recorded last year involved emerging markets, with activity value totalling $730 billion. This was a 9 per cent increase on the value of emerging market deals in 2011. Meanwhile, cross border deals also continued to represent a hefty portion of the completed M&A, totalling $911 billion in value, accounting for 36 per cent of all deals, up by 6 per cent compared with 2011.

The Thomson Reuters report shows that spinoffs and divestitures drove much of the M&A activity in 2012, accounting for almost half (47 per cent) of the total deal value globally. This is the highest percentage since records began back in 1980, suggesting that businesses are keen to streamline their operations and offload surplus divisions – and there are plenty of buyers waiting for the right add-ons to come along.

US activity, according to Mergermarket data, had the slowest year for M&A since 2010, with activity valued at $768 billion. Mining, energy and utilities accounted for 316 deals, making it the most dominant US industries, with activity valued at $160 billion.

In terms of the industries accounting for the majority of the M&A activity in 2012, there are no huge surprises with energy and power accounting for a significant 18 per cent of activity. Real estate and financial sectors also contributed strongly, accounting for 11 per cent and 13 per cent respectively. In terms of growth areas with regards to global M&A, retail deals grew by 38 per cent, while consumer products deals increased by 71 per cent.

Looking forward into 2013, analysts feel that the steady growth is likely to continue and that more deals will be done in 2013. Despite the fact that the fourth quarter was by far the most active in 2012, buyers and sellers were still being cautious as they waited for the results of the presidential election and anticipated the financial cliff, which was averted at the last minute.

Now that this uncertainty has passed, the door could be open for some serious M&A growth in at the beginning of this year.

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