European austerity measures stifling M&A activity, say dealmakers

Dealmakers in Europe want to see governments drop plans for austerity measures and resort to spending in order to stimulate mergers and acquisitions in 2013.

Over half of M&A dealmakers blame the austerity measures being favoured by European governments for a lack of confidence in launching acquisitions, research shows.

Results from Remark and mergermarket’s Doing the Deal study reveal that less than half (48 per cent) expect M&A activity to rise in 2013, with the value of deals predicted to increase by €227 billion (£183 billion) to €1.7 billion, a €300 billion decrease from expectations in 2012.

Dealmakers who predict an increase in M&A only believed the average value would reach €227 billion over the next year, with 55 per cent identifying austerity measures as the root cause for the lack of confidence.

Matthew Albert, research director at Remark comments, ‘The survey results show that there is lingering uncertainty in the market in the coming year with confidence shaken due to austerity measures and problems in the Eurozone.

‘However, dealmakers expect to see the distressed environment, coupled with the need for businesses to streamline and offload non-core assets driving some M&A activity in 2013. Cross-border opportunities also continue to provide M&A opportunities, particularly in the emerging markets of Brazil and India.’

Some 26 per cent of those questioned think that M&A activity will decrease in 2012, compared with the 8 per cent who predicted the same outcome in 2012.

The Doing the Deal study profiled the opinions of 175 European dealmakers across private equity, investment banking, accounting and legal firms.

Collectively, those individuals were involved in deals worth €136 billion last year, a sum worth 10 per cent of all transactions over the period.

Marine Eugene, director at NetJets Europe, adds, ‘With the continuing market volatility, dealmakers must work even harder to forge business relationships and create opportunities in order to be successful.

However, activity within emerging markets is increasing and they need to be prepared to act fast and be in the right place at the right time to take advantage of the opportunities as they occur to create a competitive advantage.’

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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