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Executive Summary/Highlights: 

• During the first half of 2011, global M&A continued the resurgence that began in the second half of 2010, but markets cooled in the second half of 2011, resulting in aggregate volume of US$2.38 trillion in 2011 (down 7% compared to 2010).
• Stock market volatility, fear of a “double dip,” concerns over European sovereign debt and the future of the Euro zone, and regulatory uncertainty in the United States and Europe have created uncertainty in the market and put a number of deals on hold; however, would-be acquirers’ considerable cash stockpiles, strengthened balance sheets, access to attractive financing (for many investment grade borrowers), and need to expand into new markets are continuing to drive acquisitions.
• Cross-border transactions have increased since 2009 but remain well below the 2007 high water mark, perhaps due to uncertainty regarding Europe and other markets.  In the United States, acquisitions by non-US acquirors totaled US$145 billion, down 34% from 2010, with European acquirors sitting on the sidelines, Asian acquirors focusing largely on regional consolidation and emerging market opportunities, and other emerging market players’ enthusiasm for US deals also dampening.
• “Megadeals” returned in force in 2011, particularly in the energy and pharmaceutical industries; nine deals exceeded US$15 billion in value, compared to just four during all of 2010.
• Spinoff activity also increased dramatically in 2011, as companies sought ways to streamline balance sheets and create shareholder value in volatile markets.
• Energy & Power was the most active sector for both domestic and cross-border transactions in 2011, rebounding in Q4 following two previous quarters of declining volume.  The Materials and Financial sectors followed, although volume in these sectors declined steadily over the course of 2011.
• The United States and Europe continued to drive global M&A, accounting for two-thirds of deal activity in 2011.  European deal volume rebounded slightly in Q4 following a sharp drop earlier in the year, although volume still declined 7% from 2010 to 2011.  The United States and Japan were the only regions to experience M&A growth in 2011 compared to 2010, with the 10 largest global deals involving a US or Japanese acquiror and eight of those 10 deals involving both a US acquiror and US target.

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