How was the M&A market in Q1 2012 compared to Q1 2011?
As seems to be the case for most European countries, Q1 2012 saw a decline in M&A compared to Q1 2011. Although M&A activity remained stable between 2009 and 2011 in terms of transactions numbers, there was a sharp decrease in 2012: between January and March, transactions involving at least one French company were valued at only EUR14 billion – which is three times less than for the same period in 2011, while during the last quarter of 2011, activity was up to 2.5 times more intensive. In addition to the reduction in the number of M&A transactions, the average deal size also decreased, contributing to the fall in M&A activity.
Numerous factors can explain this decline: the market was paralyzed by the continuing euro crisis, the French presidential elections in May 2012 blocked M&A activity until the winner was declared, then the change of government did not restore confidence in companies because of the legal modifications announced, in particular regarding taxes. Furthermore, some French companies that were aggressive buyers changed their position on the market and became defensive sellers (e.g. the Lagardère Group).
Originally published in the Chambers and Partners “Corporate M&A 2013” guide.
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