A couple of weeks ago, we posted the news that mergers and acquisitions were down to start 2009.  But there is one type of merger and acqusition that is on the rise in this economy: those that are bankruptcy related.  According to the Financial Times--which looked at data from Thomson Reuters for the report--there have been 67 M&A deals where the target company was in "bankruptcy of administration proceedings."  This is the highest level globally since August of 2004, and, according to the FT, restructuring practitioners expect the number to keep going up:

Among the highest-profile deals were those of Delphi, the US car parts maker that recently sold its brakes and suspension business to a Chinese buyer, and BearingPoint, the US technology consultancy that sold its government operations to Deloitte.

Practitioners around the world forecast that the number of transactions involving distressed companies must rise further.

“We’ve only just begun,” said Gregory Milmoe, a US restructuring partner at Skadden, the law firm. “Given the dearth of capital and the substantial increase in the number of companies that will be troubled, one would expect the M&A rate to increase dramatically.”

The 34 bankruptcy-related M&A deals in March pales in comparison with the montly peak of 87 back in July of 2002.  The majority of the deals have been in the United States and Japan, where bankruptcy rules allow companies to operate as they reorganize.  The industrial and retail sectors have led the way, but the deals have not been isolated in those areas. See the breakdown below:

Read the full article here.