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A return to deal making in 2010

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M&A volumes rose last year for the first time since the crisis. Capital markets think deals created more value too.

The global M&A market ended two years of malaise in 2010, rebounding decisively in the second half of the year. After languishing for the first six months in the wake of higher market volatility and the sovereign-debt crisis in Europe, companies ended the year having announced more than 7,000 deals, at a value of $2.7 trillion. This marked the first increase in M&A deal numbers and volumes since 2007, as well as a 23 percent increase over 2009 levels, which were the lowest since 2004.

Judging by share price movements before and after deals were announced, investors felt upbeat in 2010 about the acquirers’ ability to extract value from M&A. Our analysis found that deals created more value overall than they did in any year since we began tracking them, in 1997—and that acquirers were more disciplined at capturing this value for their shareholders. Other trends in M&A for the year included continued growth in cross-border M&A, an increase in the number of deals in Asia and Latin America, and modest growth in private-equity deal volumes.

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Author:David Cogman & Carsten Buch Sivertsen, McKinsey&Co