London
September 10, 2007

Cheap debt is no longer the main factor driving M&A activity in Europe, finds the fourth semi-annual M&A Monitor conducted for IntraLinks, the leading provider of online workspaces. The survey respondents were M&A professionals focusing on the European market, including corporates, bankers, lawyers and advisors.

Cheap debt has fuelled M&A activity in recent years, but the recent credit squeeze could finally end the era of cheap-debt takeovers. Leading players in the European M&A industry responding to the survey gave cash surpluses at corporates and strategic reasons (31% each) as primary factors for pursuing takeovers. While cheap debt was the top pick (31%) in the IntraLinks April 2007 Monitor, this latest survey found only 21% of respondents citing cheap debt as primary reason in affecting M&A activity.

European M&A volumes have already surpassed the $1.2 trillion mark in the first half of 2007. This high level is likely to continue since, despite the credit crunch, optimism remains high. A full 88% of survey respondents express a positive view of M&A activity in the coming year. The number of respondents reporting a pessimistic outlook, however, has doubled to 11% since August 2006. British M&A professionals are the most bullish regarding European deal volumes, with more than half (51%) believing that levels will grow by at least 20 per cent.

Although the European M&A market is expected to remain buoyant in the next twelve months, there is a sense among survey respondents that the environment might become more challenging and competitive. A speedy and efficient due diligence process is therefore even more vital for the success of a transaction. Senior-level respondents in particular consider the responsiveness of the deal team (35%) as the primary factor for the success of an M&A deal. This highlights the potential benefits of using virtual deal rooms (VDRs) as they enable the team to be more responsive, allowing a quicker response to buyer questions for example. Almost all survey respondents (90%) who had used a VDR felt that it enhanced the due diligence process and a third said that deal timelines could be halved.

European corporate cross-border transactions are expected to be the most common deal type in the next 12 months (33%). The sense that Asian corporates will snap up European assets also remains strong (23%). While private equity houses from both the US and the UK were considered major competitors for attractive assets in recent surveys, their influence seems to decline. Less than one-fifth of respondents think that private equity firms in Europe (17% vs. 22% in the April Monitor) or the US (13% vs.21% in the April Monitor) will lead deal activity in the coming year.

This shift in thinking may reflect the current market turmoil. Since private equity houses thrived on cheap debt in recent years, they may bear the brunt of the fallout from the current credit squeeze.. The proportion of respondents identifying the bursting of the loan bubble as the biggest deal breaker rose from 26% in April to 45% in the latest survey.

Across sectors, respondents predict that the financial services industry will see the highest level of M&A activity (30%) – largely unchanged since the April 2007 Monitor. Deal activity in the energy sector is also expected to remain high.

Amongst the emerging market economies, Russia (36%) and Poland (27%) are cited as most attractive target markets for European companies making acquisitions. Chinese companies are considered to be the most acquisitive among those from the emerging markets (34%), which ties in with the expectation that Asian corporates will target European assets.

Commenting on the survey results, Andrew Pearson, Managing Director EMEA at IntraLinks, Inc said:

“ With deal volumes this year already surpassing the remarkable levels set last year, it is good to see that this level of activity is expected to continue, with overall optimism remaining high.”

“ It is also clear that respondents are continuing to use technology to capitalise on this buoyant M&A market. Our study shows some of the advantages that using virtual datarooms can bring to the transaction process - increasing the responsiveness of the deal team, facilitating a more competitive process and tracking buyer interest to name but a few, with nearly all respondents stating that virtual datarooms speed up due diligence. These advantages become even more valuable should we see a more challenging M&A environment.”

EDITORS’ NOTE

ICM Research conducted 348 interviews between 20 July and 6 August online with M&A professionals across Europe. Respondents were drawn from a cross-section of European M&A professionals.

About IntraLinks
IntraLinks® On-Demand Workspaces™ connect business communities and accelerate the intelligent flow of information and documents among participants. Through IntraLinks' secure, neutral, online environments, companies are better able to compete globally by accelerating essential business processes, simplifying communication and fostering rapid workflow. IntraLinks is easily accessible anywhere, anytime using a web browser.

Since 1997, more than 700,000 participants representing over 80,000 organizations worldwide have used IntraLinks On-Demand Workspaces™ to communicate and collaborate on thousands of projects and transactions. IntraLinks has been adopted widely in the financial services and pharmaceutical industries, where its clients include AstraZeneca Pharmaceuticals LP, Bank of America, Bear Stearns, Deutsche Bank, FDIC, TD Securities, Thomas Weisel Partners and WestLB, among hundreds of others. Founded in 1996, IntraLinks is headquartered in New York with offices around the world. For more information, visit www.intralinks.com.