• by Gavin O'Malley  @mp_gavin, April 1, 2009

Faced with the global economic downturn and tightened credit markets, the M&A market all but grinded to halt in the first quarter of the year, according to a new report from investment bank Jordan, Edmiston Group Inc. 

Transactions and transaction value declined 36% and 91%, respectively, year-over-year, as 129 transactions were announced across the media, information, marketing services and technology sectors in the first quarter.

What's more, the number of deals completed in the first quarter declined 7% from the fourth quarter of last year. All told, the $1.3 billion in deal value in the first quarter was the lowest on record since Jordan, Edmiston began compiling M&A volume more than 10 years ago.

Looking ahead, however, media, information, marketing and technology companies continue to re-tool their businesses for digital and are actively looking for strong acquisition opportunities of high-growth emerging businesses, according to the report.

George Gallate, global chairman at Euro RSCG 4D, is quoted in the report saying he is "absolutely" actively seeking acquisition opportunities. Hearst is also actively looking for acquisition opportunities and feels "there is potential for more deals now than in prior years."

Meredith, meanwhile, is looking to add complementary services to their digital capabilities through acquisitions, while, for Pearson, "M&A is very active right now, especially in education."

During the first quarter of the year, 62% of the announced deals and 68% of total transaction value arose from two main industry sectors --marketing and interactive services, and online media and technology, where smaller digital, interactive marketing, and technology growth companies are attractive acquisition targets.

Marketing and interactive services represented 37 deals announced in the first quarter, valued at $467 million.

Online media and technology was the most active sector for M&A in the quarter with 43 transactions, accounting for 33% of total deals announced. Major media companies, such as Walt Disney Co., were active in acquiring consumer online media companies to expand their digital offerings.

Others spun off non-core assets, such as IAC's sale of Match.com to Meetic for over $100 million, and its divestitures of ReserveAmerica and 236.com.

Many transactions, according to Jordan, Edmiston, were last-resort exits for companies that could not continue independently, which helped account for an 87% drop in deal value, as compared to the first quarter of last year.