Mergers and acquisitions down in volume, value for 2002

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For the merger and acquisition market, there will be grim satisfaction in closing the door on 2002. Though, by historical accounts, it wasn't such a bad year, according to a news release by Mergerstat. |ret||ret||tab|

When the dust settles, total announcements by U.S. dealmakers in 2002 will tally about 7,387 transactions, making it the sixth best year since 1962, when Mergerstat first began tracking merger and acquisition activity.|ret||ret||tab|

Mergerstat LP tracks mergers and acquisitions involving U.S. and European business entities excluding the exchange of business assets, private placements, spin-offs and open-market transactions.|ret||ret||tab|

Still, markets have short-term memories and this year's activity fell well short of the 8,545 transactions announced in 2001 and the 11,123 transactions announced in record-breaking 2000. |ret||ret||tab|

Disclosed dollar value on transactions also saw a sharp decline this year compared to that of recent years $441.3 billion in 2002 versus $683 billion in 2001. Blame it on the dearth of big deals. In 2002, dealmakers reported just 68 deals worth more than $1 billion, compared to 119 in 2001. The overall value of these deals was $223.5 billion in 2002 compared to $401.2 billion in 2001.|ret||ret||tab|

As a whole, Europe fared a little better in the merger and acquisition space than the United States in terms of total deal announcements. European dealmakers recorded about 7,704 transactions in 2002, yet like their U.S. counterparts, their activity numbers paled in comparison to 2001, in which they announced 8,871 transactions.|ret||ret||tab|

Europe also reported lower values on transactions like dealmakers in the United States did. For the year, total disclosed deal value for Europe fell to $417.7 billion in 2002 from $676.4 billion in 2001. Although there were about the same number of deals worth $1 billion or more 81 in 2002 compared to 82 in 2001 the deal value on those deals tended to be much smaller $216.7 billion in 2002 versus $465.6 billion in 2001.|ret||ret||tab|

Clearly, like the Western economies, the hoped-for rebound that merger and acquisition observers kept predicting all year long never quite materialized. Many strategic and financial buyers remained on the sidelines, awaiting some positive news and searching for ways to fund a deal, given a downtrodden stock market and an uptight credit environment. Long gone were the days when stock was used almost as frequently as cash to pay for a purchase; cash was by far the payment of choice in 2002. And caution was the watchword.|ret||ret||tab|

In Europe and the United States, the number of private company agreements, the main engine of merger and acquisition activity, fell by 18.5 percent, the number of public company deals dropped by 24.9 percent, and the number of unit divestitures slowed by 8.1 percent in 2002.|ret||ret||tab|

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