Merger and acquisition activity remains sluggish

New York City Despite earlier improvements in credit and equity markets and corporate balance sheets, U.S. merger and acquisition activity remained sluggish in the first half of 2010, according to Transaction Services practice at PricewaterhouseCoopers, LLP (PwC).

Unforeseen economic events in the last two months triggered a global ripple effect reviving sentiments of uncertainty, setting the stage for a challenging merger and acquisition environment for large cap transactions in the second half, the company said.

“Going into the second half, record dry powder in the private-equity space and unprecedented cash levels on the balance sheets of corporate America will combine with the desire of family held businesses and private equity backed management teams to sell prior to looming tax increases,” said Bob Filek, partner with PricewaterhouseCoopers’ Transaction Services.

Merger and acquisition activity was down 3% compared with the same period in 2009. The number of closed deals in the first half of 2010 represents the lowest deal volume this decade, according to PwC. For the first five months of 2010, there were 2,969 closed deals representing $317 billion, compared with 3,065 deals valued at $323 billion in the same period of 2009.

While deal value and volume are down, willing lenders and open credits markets are available for transactions, according to PwC. “Banks and institutions are providing capital to execute deals,” said Greg Peterson, partner with PricewaterhouseCoopers’ Transaction Services. “They are lending more conservatively, but credit is available from a variety of sources and in a variety of types -- including traditional leveraged loans.”