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Private equity funds can become the driver for increasing a number of small transactions that is a heart of the M&A market

Last year was one of the largest in terms of mergers and acquisitions in the world. Globally an amount of announced transactions had reached $3.8 trillion that made this year the forth banner year for M&A. 

At the same time, a number of announced transactions continued to decline because many companies decided to set aside its activities due to the U.S. withdrawal from the euro area and the trade and economic confrontation of the USA and China. In Europe, the total transaction value declined by 30% because European countries, including Germany, had experienced the slowdown in economic growth, and uncertainty regarding the Brexit engulfed the Great Britain and the region. 

Another factor, that affected a decline in the number of transactions, is market capitalization of companies that was at record levels this year: S&P grew by 29%. This year acquisitions had been too expensive and companies had to pay for acquisitions by own rising stock. 

Regardless of the fact companies are not looking for a reason to run away from transactions, Capital Times expects that a number of transactions will decline marginally in 2020 because macroeconomic risk for the board of directors is still high. If estimation of companies declines, Private equity funds can become the driver for increasing a number of small transactions that is a heart of the M&A market.

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