M&A activity slowed in 2011 as uncertainty surrounding the European sovereign-debt crisis continued to vex the global economy. The growth that characterized the first seven months of the year came to an abrupt halt in August as the crisis heightened, accompanied by a sharp 17 percent drop in the S&P 500 and a surge in volatility.1 For the year, companies around the world announced 7,700 deals, valued at $2.7 trillion—a meager 3 percent increase from 2010.
Not surprisingly, activity among companies headquartered in Europe was most affected, falling by 26 percent between the first and second halves of 2011—compared with only an 18 and 9 percent drop among companies in the Americas and Asia, respectively. Overall, acquisitions by European companies constituted just 31 percent of M&A by volume, the lowest share for the region since 1998. Cross-border activity was also affected as Asian and US companies actively sought out deals in Europe. Although total activity for the year remained steady at the 2010 level, the amount of M&A into Europe by non-European acquirers increased to $220 billion because of a few large transactions and an increase in midsize and small acquisitions.