The global mergers and acquisitions market reached a record $3,850bn over the first nine months of the year as a whole, but experienced a dramatic drop in the third quarter as the credit markets seized up and buy-out activity collapsed.

The volume of deals worldwide fell 42 per cent to $1,000bn during the third quarter, compared with the $1,740bn announced in the previous quarter, Dealogic, the financial data provider, said.