CORPORATE dealmaking in Scotland in 2008 collapsed to almost half the level of the previous year as the impact of the impending recession hit home.
Mergers and acquisitions worth just £41.1 billion were completed north of the Border in 2008 – 43 per cent lower than the previous year's figure of £72.5bn, new research has revealed.
Although the amount of M&A activity shows a substantial fall in
Scotland, the figures paint a slightly more upbeat picture than for the UK as a whole.
Across the UK, the total value of deals, including those in Scotland, dropped by 53 per cent – down to £204.7bn last year – according to new research by Corpfin, a subsidiary of information firm Experian.
The frequency of M&A activity in Scotland also dropped, by 16.8 per cent, with only 460 deals being completed last year, but this was also marginally better than the figure for the UK, where the number of deals slipped by 21.5 per cent to 5,251.
Mark Ligertwood, director of private equity firm Dunedin Capital Partners in Edinburgh, said he believed Scotland's comparatively good performance had come from a booming oil industry in Aberdeen – and two major deals by now-troubled banks HBOS and Royal Bank of Scotland.
He said: "It looks like in 2008, Scotland has been slightly more resilient than the rest of the UK. However, there are a couple of factors which weigh on that.
"Firstly, major banking deals, such as HBOS's sale of the Bank of Western Australia for £1.3bn at the end of the year, skew the figures. The other area of resilience is the effect of the rising oil price on industry in Aberdeen."
He added: "My feeling is that the oil market will be slightly slower next year. We have generally seen M&A activity fall off towards the end of the year, so I would expect the first half of 2009 to also be slower."
Ligertwood predicted that next year could see a similar number of deals, but a further drop in the value – as more sales come from troubled companies that have fallen into the hands of administrators. He said: "I would expect the volume of sales of companies which are in administration to increase."
The most active financial firm in Scotland last year was Deloitte, which handled 15 M&A deals, while Maclay, Murray & Spens was the busiest legal firm, working on 23 deals.
Brian Rarity, strategic consultant at Corpfin, added: "Deal activity has not stopped altogether and Q4 2008 figures should be considered as a comparator for Q1 2009 performance. The move into 2009 brings the psychological benefit of a re-start, with confidence most in need of a timely boost."
