Peak, plateau or paradigm shift?
In the first half of 2007, the global mergers and acquisitions (M&A) market looked likely to enjoy yet another record-setting year, as rapidly expanding funds and readily available credit enabled private equity firms to push deal activity to new heights. Then the bottom fell out of the US sub-prime mortgage lending business. Credit became much tighter as the shock waves spread throughout the international banking community and several private equity firms were forced to renegotiate or even abandon deals they were in the midst of completing.
However, many companies still have plenty of liquidity. Some private equity firms also have unspent capital, and the banks will eventually trade out of their unsyndicated positions after writing down their losses.
This paper examines the overarching trends in the global deals marketplace, particularly in light of the recent credit crisis. It also discusses what is happening in the most active industry sectors and in each geographic region.
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