Clifford Chance

Growth markets and consumer sector offer reasons for optimism amidst significant drop in global M&A

Clifford Chance previews its 2013 Global M&A Insights report

London, 13 December 2012: Global M&A activity has fallen by 10% by value in the 11 months to November 2012, according to the sneak preview into the next Global M&A Insights report from international law firm Clifford Chance[1]. The value of global M&A deals during this period fell to US $1,862bn from US $2,074bn year on year.

Despite this, Clifford Chance identifies sectors and markets showing increased activity, notably a rise in deals in October and November, suggesting an uptick in Q4. North American inbound M&A saw a 64% rise and deal activity in the consumer sector enjoyed 43% increase (in value terms) in the year to date.

Other signs of life for global M&A in 2013 identified in the report include:

• Companies located in low-growth developed economies looking to drive higher returns by accessing the increasing spending power of consumers in growth markets, particularly regions such as Latin America, Africa, India and South East Asia
• High quality assets becoming available in Europe at competitive valuations, with the sale of non-core European assets and sovereign divestments likely to attract expansionist international buyers with strong cash positions
• Deals in financial services sector - capital constraints, a tough economic environment in the UK and the Eurozone, plus on-going regulatory change, are set to continue driving financial services M&A

David Walker, corporate partner and global head of private equity at Clifford Chance, said: “The continued global economic and political uncertainty creates a lack of confidence in boardrooms which has stifled any expected resurgence of M&A deals in 2012.

“Despite increased pressure from shareholders and the temptation to use excess cash to buy discounted assets, the M&A decision makers have been reluctant to take a leap into choppy waters.

“But there are pockets of opportunity out there. Consumer facing businesses have offered some of the best prospects for deal hungry investors. This has been particularly apparent in growth markets like Africa, South East Asia and India, where the lure of the seemingly ever increasing consumer spending power has attracted investors.”

David Walker concludes: “Any return of confidence in 2013 could well see an uptick in European M&A, particularly as foreign investors look to take advantage of high quality target opportunities at attractive valuations."

Each half year, Clifford Chance's Global M&A Insights report incorporates Mergermarket data to review global M&A activity and draw on the firm's geographical, sector and legal expertise to deliver insights into future trends. A preview report which launches today includes data from the first 11 months of 2012.

Clifford Chance's Global M&A Insights report is part of the Firm's Global M&A Toolkit. The toolkit comprises a growing collection of web-based transaction tools and in-depth analysis of the most important market and regulatory developments in M&A regimes across the globe. Please visit: www.cliffordchance.com/GlobalM&AToolkit where you can also download the new toolkit app.

Clifford Chance topped Mergermarket's league table of legal advisers for Global M&A by value during the first three quarters of 2012, advising on 152 deals worth £138,990m.

[1] Provided by Remark, taken from mergermarket.com