The market for corporate control is facing a downturn. Thanks to tough borrowing conditions, depressed stock values and the slumping global economy, the value of merger and acquisitions transactions cancelled since the beginning of October almost equals the value of deals that have been completed, according to data compiled by Thomson Reuters. Those figures do not, however, include withdrawn deals for which values were never publicly disclosed. Notable withdrawn deals include the $147bn bid for Rio Tinto, the Anglo-Brazilian mining group, by BHP Billiton, the Australian mining giant; and the failed $48.5bn buy-out of Canada’s BCE telecoms by a consortium of private equity groups. The total volume of worldwide M&A deals globally fell 29 per cent in 2008 compared with 2007, with the US (down 32 per cent) and Japan (down 45 per cent) particularly hard hit.

The reduced activity in the market of corporate control, along with the collapse of iconic companies in the advisory community (investment banks, rating agencies, commercial lenders, consultants, lawyers, accountants) could be perceived as a big blow to many companies for whom acquisitions have been the preferred growth strategy in past decades. When carefully chosen, priced and executed, M&As help companies create value by providing access to new technological or human resources, exploiting learning opportunities, meeting customers’ needs, exploiting economies of scale or restructuring industry capacity.