Where are all the deals?

So Q3 of 2012 has just finished and we are entering Q4, historically always one of the busiest quarters of the year for the world’s dealmakers. It’s hard to find any positives about announced global deal activity in Q3, so let’s get the doom and gloom out of the way first and see where we can find some positives.

Global announced deals fell to just 13,968 with a dollar value of USD 655bn in Q3 2012. This is both the lowest number of deals and deal values recorded by Zephyr since Q3 2004, some 8 years ago, and is 14.4 per cent down in volume terms and 33.0 per cent down in value terms when compared with Q3 2008, when the global recession was considered to be at its worst. The drop in global deal activity between Q2 and Q3 in 2012 is greater than that shown in the same two quarters in 2011, which I am sure is demonstrative of the impact that the as yet unresolved issues with the euro zone are having on confidence. I am sure that on a conscious level many people have simply stopped paying attention to the ongoing issues within the euro zone, but clearly the impact is still being felt in the global deal markets.

There were a couple of regions where deal activity in Q3 did increase on Q2 levels, these being deals involving targets in North America and the Middle East. Although transaction numbers were lower than in Q2, North American targets accounted for an increase in deal value of nearly 31.0 per cent on the previous quarter, with a figure of USD 273bn recorded. Targets in the Middle East region fared even better in percentage terms, with a quarter-on-quarter increase of 152.0 per cent, marking the highest level of third quarter deal activity in the Middle East since Q3 2008. Private equity deals also showed an upturn, recording the highest value of deals announced (USD 75bn) since Q2 2011, but interestingly, deal numbers were significantly down on Q2 (22.0 per cent), perhaps indicating that valuations are increasing slightly, especially in the secondary buyout space.

Once again, I find myself looking at the last quarter of the year hoping that all the deal makers and CEOs have come back from their summer holidays ready to hit the ground running, and keen to get the transactions that we keep being told are “in the pipeline” completed. Otherwise 2012, like the British weather this year, could turn out to be another deal washout.