European M&A is on the wane as the sovereign debt crisis continues its stranglehold on the market, according to data from American Appraisal.

In the first half of 2012, there were 2,037 deals announced in Europe worth a total of $333.3bn (€265.1bn), a 21 per cent drop in value and 27 per cent reduction in volume compared with the same period last year. 

Average valuation multiples across the region fell between 2010 and 2011 even for high-quality assets, the study reveals, with median Ebitda multiples for deals falling from 8.1x in 2010 to 7.6x last year. 

“In the absence of a lasting solution to the eurozone’s debt troubles, legislative uncertainty and financial market volatility are bringing additional stresses to the process of acquiring or selling a business,” said Mike Weaver, managing director of American Appraisal in the UK. “Nevertheless, as evidenced by the reduced average Ebitda multiples in the region over the past two years, the silver lining is an attractive valuation climate for eurozone acquirers,” he added. 

While the European market continues to suffer, other parts of the world are showing more promise. The data reveal that valuation multiples are increasing in Asia, while deal volumes and valuations increased in Latin America, the only region to do so.