A year of failed mergers and acquisitions

24 December 2008

In a year of many mighty banks going bust or being taken over; AIG being virtually taken over by the government; the Madoff ponzi scheme running into billions right under the eyes of regulators; auto industry giants going on bended knees to the US Congress, many mergers and acquisitions were stalled resulting in a sharp decline in fees to investment bankers.

The year 2008 will be remembered for long time by investment bankers, maybe not for the right things done, but for the record number of deals that were trashed with as many as 1,309 transactions valued at approx $911 billion being cancelled in a year of extreme liquidity crunch, created largely by the bankers themselves.

With volatility in valuations, the total transactions worldwide in M&A were $3,280 billion, which was a sharp decline by 29 per cent compared to last year.

According to Dealogic, a financial data provider, the total volume of worldwide M&A reached $3,280 billion in the year to date, down 29 per cent from the full year 2007 amid financing difficulties and volatility in valuations

Last year, 870 deals valued at $1,160 billion were cancelled compared to 1,309 deals valued at $911 billion this year.

Among the biggest deals that suffered a hit-and-run at the financial highway was the world's biggest merger between the mining giants, BHP Billiton's and its rival, Rio Tinto, valued at approx $147.8 billio. (See: BHP Billiton abandons bid for Rio Tinto)