M&A Deals Drop in 2008

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Jan. 22 – Coupled to the west, India based merger and acquisition deals dropped 33 percent in 2008. According to Grand Thornton who released their Deal Tracker report India witnessed 454 M&A deals valued at US$30.95 billion as against 676 deals with a value of US$51.11 billion in 2007. Similarly, private equity also fell by US$8 billion in 2008 to US$11 billion. As a result, the total value of 766 deals (M&A and PE) announced during 2008 was US$41.54 billion as against 1081 deals valued at US$70.14 billion in 2007.

Financial guru’s conclude M&A deals fell in 2008 due to several global and domestic issues. One of the reasons is the overall drop in M&A deals worldwide. Globally M&A deals worth US$2.9 trillion were announced in 2008 as compared to US$4.48 trillion in 2007 and US$3.61 trillion during 2006, registering a fall of 35 percent between 2007 and 2008.

Another factor that contributed to the downturn was that in 2007, triggered by an optimistic market atmosphere money was chasing a limited number of deals which raised company valuations and spurred M&A’s. Consequently in 2008, valuations fell and people decided to hold off deals until the market was bullish again. Due to optimum valuations, lower interest rates and moderate inflation in India, experts expect the M&A market to flourish again.