Merger and acquisition deals in the Midlands dipped further in the first quarter of this year but the region saw a much shallower decline than the rest of the UK.

According to market analysis group Experian’s Corpfin research arm there were 127 transactions announced in Q1 this year in the Midlands, only three deals behind the 130 in the previous quarter.

The fall was a far less dramatic drop than the decline seen nationally.

The UK as a whole saw a 10.4 per cent decrease in UK merger and acquisition deals and flotations, rights issues and placement activities during Q1 compared to the last quarter of 2008.

Nationally the number of deals fell from 1,073 to 961 during the period and a total of £69.2 billion worth of transactions were announced in the UK in Q1 2009.

But deal values in the Midlands crashed during the period, down 74 per cent on the previous quarter from £883.5 million to £229.4 million in Q1 2009.

That decline was even larger when compared to the figures for Q1 2008, representing a 91.7 per cent drop from the £2.8 billion worth of transactions in Q1 2008. But Corpfin pointed out that these figures were, however, largely influenced by the Tata Motors’ bid for Jaguar and Land Rover worth £1.2 billion in March 2008.

Among the Midland firms, Altium Capital and PWC Corporate Finance were the most active financial advisors with three transactions each while HBJ Gateley Wareing, Wragge & Co and Hammonds topped the league tables for legal advisors by volume with four deals each.

Matt Waddell, head of corporate finance at PricewaterhouseCoopers LLP in the Midlands, said: “Since the onset of the credit crunch, business valuations have fallen by about 15 – 20 per cent in the Midlands and this led to a slowdown in transactions.

“But in the medium to longer term, businesses in the Midlands should expect values to start to rise again.

“The market has moved from peak to trough very quickly and although valuations could still fall further it is likely that their true value is probably higher than it is today.”

Corpfin strategic consultant Brian Rarity said: “During Q4 2008, it was not clear to what extent deal values and volumes would continue to fall.

“The Q1 2009 figures show a further decline in volume of ten per cent in relation to Q4 2008 but there was a slight increase in deal value. Government rescues however greatly distort the picture and until the need for intervention dies away and the situation stabilises normal activity is unlikely to resume.

“We would then expect to see the evidence of restructuring activities appearing – refinancing, acquisition of weaker competitors and the tapping of investors to strengthen balance sheets. Advisers are going to be busy even if they will be doing slightly different things from what they did 12 months ago.”

There were no large transaction recorded in the Midlands in the first quarter of this year and although Travis Perkins in Northampton is rumoured to be planning a rights issue to raise up to £300 million, this is yet to be confirmed by the firm.

The last quarter of the previous year saw only one transaction worth over £100 million announced - Deutsche Lufthansa increased its stake in British Midland by 50 per cent for £316.8 million - while Q1 2008 recorded four large deals worth a total of £1.8 billion. In the mid-cap range, the results of Q1 2009 have underperformed those of the previous quarter by both volume and value.

Eight mid-cap transactions were announced in Q1 2009, worth a total of £204.6 million, a significant drop in comparison to the last quarter of 2008 when 15 transactions accounted for £521.2 million. The 23 mid-cap transactions announced in Q1 2008 had a total value of £836.3 million.

The largest mid-cap deal of Q1 2009 which approached the £100 million threshold was the acquisition of Pallasades Shopping Centre by Birmingham City Council from Agora Max of London for £91 million.

A total of 13 small transactions were announced in Q1 2009, compared to 25 last quarter and 46 in Q1 2008.

The worth of these deals in Q1 2009 was £24.8 million, a decline of 45.3 per cent from Q4 2008’s total worth of £45.4 million. Q1 2008 recorded total value of £151.6 million.