The year 2008 was a challenging period for mergers and acquisitions (M&A) in the United States as many deals were hampered by an ever-dwindling credit market. If current conditions continue into 2009 and financing remains limited, then M&A activity in 2009 will be on the light side with a few positive aspects. The deal landscape will be dominated by distressed investments across sectors including financial services, automotive, consumer products, and retail, according to insiders with the Transaction Services Group of PricewaterhouseCoopers.

Yet it is important to note that 2007 and 2006 set record highs in terms of the volume of deals. A catalyst to these record years was the debt financing at generous (read: cheap) terms buyers had access to—not so much a reality now. Because of the miserable economy and the decrease in deal volume, many have hastily concluded that multiples should also have been down for 2008. Some sources have even reported non-dramatic decreases in multiples (such as a 0.3% decline in selling price to revenue multiples), though the substantial finding remains the drop in deal activity. Using the Pratt’s Stats® database, we performed a rough test of the decreasing multiple theory—a quick “sanity check,” if you will. Some basic results are below, and the full chart is available at our Free Downloads page. You be the judge.