Deal value is down across the world but distressed deals are at record levels, according to an M&A review by financial research company Dealogic.

The combined value of global deals completed in the first nine months of 2009 was down by 35 per cent from the same period in 2008 ($1.67 trillion or £1.1 trillion), but M&A involving bankrupt or distressed companies reached $233.1 billion, an increase of 354 per cent.

Over half of distressed deals (59 per cent) were in the finance sector. This reflects the effects of the banking crisis since the collapse of Lehman Brothers in September 2008, which has seen governments injecting $592.8 billion into the sector.

US companies were the top target for bankruptcy and restructuring M&A, accounting for 42 per cent of the global combined value ($98.5 billion), while the Asia Pacific region remained largely unscathed, with only 12 per cent of the world's share ($28.1 billion).

Advisers have also felt the brunt of the deal drought, with fees down by 50 per cent to $8.6 billion. This is the lowest amount in the first nine months of a year since 2003.

Despite the problems in the market, private equity buy-outs have increased every quarter of the year, reaching $19.2 billion from July to September. At a value of $176.6 billion for the first nine months, the figure is still 76 per cent lower than the same period last year.