Glimmer of hope emerges for M&A market recovery

While new figures reveal that global M&A is at its lowest level for six years, the renewed prospect of big-name deals has raised hope of a resurgence in City PR.

T-Mobile: Owner Deutsche Telekom looks to sell the firm
T-Mobile: Owner Deutsche Telekom looks to sell the firm

Data from Mergermarket found that both the number of transactions during the first half of the year and value of those deals had plunged by 47.4 per cent and 43.6 per cent respectively compared with the same period last year.

The situation is particularly grim in Europe, with deals decreasing by 66.1 per cent by value compared with the first half last year and falling 68.9 per cent against the figures from the second half of 2008.

The slump in M&A has hit financial PR hard, given that most top-line agencies have traditionally relied on transaction project fees for between one-third and a half of revenues.

But hopes that the market has hit the bottom and is beginning to revive have been boosted by a smattering of high profile M&A stories in the headlines.

'After you have had a crash like this the key issue is stabilisation,' said Charles Watson, CEO of FD.

'No-one wants to catch a falling knife, but when it is firmly embedded in the ground people will start to move,' he added.

FD is, along with Brunswick, working for Anglo American on the potential bumper merger with fellow mining firm Xstrata - represented by Aura Financial.

This week it was suggested Maitland-advised Tesco might be looking to swoop for Northern Rock, advised by Brunswick, if the Government sells the bank over the coming months.

Also, Deutsche Telekom is reported to be selling T-Mobile UK, with Maitland-advised O2 and Finsbury-advised Vodafone said to be interested.

Mergermarket's report stated that M&A tended to be a lagging indicator and that the rebound in the equity markets from the lows of March would be followed by 'a spurt of deal-making.'

One agency boss said that he knew of a number of clients on the brink of acquisitions, but that negotiations over terms and price were taking far longer in the current market.

Hugh Morrison, co-founder of M: Communications, expected M&A activity to turn upwards towards the end of the year because of the increased level of stability in the market, but that this increase would not constitute another great boom in M&A.

PR ADVISERS TO EUROPEAN M&A H1 2009

H109 YE08 Agency Deal value (US$m) Deal volume
1      1   Brunswick Group         87,845     35
2      5   Kekst and Company   44,391      5
3      3   Finsbury Group           38,354     24
4      2   FD                            33,663     36
5     15  Barabino & Partners    31,883     19
6      4   Maitland (AMO)          27,980     29
7     26  Estudio de Comunicacion 18,753  9
8     22  Abernathy MacGregor Group (AMO) 17,472 9
9      6   Hering Schuppener Consulting (AMO) 15,067 10
10   13   Robinson Lerer & Montgomery 13,653    1

Source: Mergermarket

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