Mergers at snail's pace

Global M&A activity has been slow to rebound. Despite a strong start that produced four blockbuster transactions in one week, the first half of 2013 was the slowest opening six months for mergers in four years: about $US996.8 billion of deals were announced, down 13% versus the same period a year earlier, and only 16,808 deals were announced—the fewest for that period since 2003 (Thomson Reuters).

The article notes a paradox: borrowing costs remain near record lows, which should make acquisitions cheaper, but many deals are still failing to close. Advisers say buyers and sellers talk about deals only to see them die in the marketplace, and some senior decision‑makers remain cautious because of memories from the financial crisis—factors that are muting activity despite cheap finance.

Low borrowing costs reduce the price of financing acquisitions and typically support deal-making. The article confirms that the price of borrowing remains near record lows, giving buyers relatively low acquisition costs, but it also notes that cheap finance alone has not yet translated into a sustained merger boom.

Not necessarily. While the market saw a brief surge that produced four big deals in one week, the overall picture for the first half of 2013 was still weak. That early flurry did not prevent H1 2013 from being the slowest six‑month period for mergers in four years, indicating only a patchy or tentative recovery so far.

Advisers are puzzled because many of the traditional conditions for a deal boom exist, such as cheap credit, but deals often stall. Scott Barshay of Cravath, Swaine & Moore observed buyers and sellers discuss transactions only to have them die in the marketplace. Michael Carr of Goldman Sachs suggested decision‑makers who were in key roles during the financial crisis remain cautious, and those memories continue to influence behaviour.

The deal value and volume figures cited in the article come from Thomson Reuters data, which reported about $US996.8 billion of announced deals in the first half of 2013 and 16,808 transactions for that period.

The article does not give personal financial advice, but it highlights a slower pace of merger deals despite cheap borrowing. For investors, this means fewer corporate takeover events driving share prices in the near term. Investors who rely on M&A as a catalyst should monitor deal flow and corporate announcements, but any portfolio changes should be based on individual goals and, if needed, professional advice.

The article suggests that while structural supports for deals (like low borrowing costs) exist, behavioural factors—chiefly the caution of decision‑makers shaped by the financial crisis—are holding activity back. A revival would likely require increased confidence among those leaders and more deals moving past initial discussions into firm announcements and closings.