Mergers and acquisitions fall as executive caution grows

Merger and acquisition activity has fallen sharply so far this year‚ figures show.

The number of mergers and acquisitions taking place in the UK has fallen to its lowest level since records began in 1995, Dealogic has found.

According to the financial data and software company, the volume of non-governmental deals carried out so far this year totals $14.6 billion (£10.3 billion), the Financial Times reports.

Including government acquisitions, volumes stand at $46.1 billion (£32.5 billion). During the same period last year, volumes were $90.7 billion (£63.9 billion).

Analysts believe the decline in merger and acquisition activity is down to falling confidence among company executives, who are worried about volatility in the debt and equity markets.

Deals have also fallen by 42 per cent globally, Dealogic found, reaching $482 billion (£340 billion) in value so far this year, according to the Business Standard.

Some 6,693 deals mergers and acquisitions have been registered, compared to 10,182 in the same period in 2008.

The financial sector took the lion's share of the larger deals, with 266 above $120 billion (£85 billion) in value. Healthcare was the second largest player, registering 196 transactions of this size.

Commenting on the decline in activity in the UK, David Brooks, head of mergers and acquisitions at Grant Thornton, told the Financial Times: "We have seen a complete collapse of deals, as most CEOs dread calling the bottom of the market too early and overpaying on acquisitions."

However, he said further deals and commercial agreements are likely in the financial sector as banks look to sell off some of their assets in an effort to streamline their businesses and focus on core banking.