Contrary to economic gloom and doom headlines, M&A deal volume has held up well from developed to emerging markets. In the first half of 2009 there was a precipitous drop in deal volume, but since then there has been a steady climb in transaction activity and the latest KPMG Emerging Markets International Acquisition Tracker (EMIAT) confirms this. Transaction activity, however, is still well below historical peaks.

Emerging markets remain a highly attractive target for trade buyers from the developed regions, with the number of deals rising for the fourth consecutive half-year.

In the six months to 30 June 2011, completed purchases totaled 693. Despite the upward trend, this is still 16 percent below the peak of 2008. There were over three times as many D2E (developed to emerging) deals as E2D (emerging to developed) deals. E2E (emerging to emerging) deals are running at just over half of E2D and are at their lowest level since 2006.

Deal volume between the developed and emerging economies analyzed in the EMIAT has remained fairly constant, with 913 transactions in H1 2011 compared with 926 at year end 2010 and 922 a year ago. Despite being down on the heights of 2008 (1095 transactions in H1), the latest figures are over 26 percent up on the low of 2009.

“Developed country interest in emerging markets has continued to increase, supported by strong corporate balance sheets prepared to pay for attractive opportunities," says David Simpson, Global Head of M&A at KPMG and a partner in the UK firm.

The opposite flow, from emerging countries to developed markets, has suffered from concerns about economic conditions. The short-term outlook is unclear but the continuing rise of the major emerging markets will fuel many more deals over time.