Colorado merger activity dropped sharply in 2008 as the economy cratered and the leveraged-buyout boom of prior years came to a close.

There were 339 deals totaling $11.4 billion in 2008 in which the buyer, the seller or the asset sold was Colorado-based, according to data from Bloomberg. By contrast, 2007 saw 406 deals worth $87.2 billion.

The remarkable drop in dollar value is due in no small part to Colorado's role in the buyout boom of 2007. Two mega-deals, the sale of Greenwood Village-based First Data and Denver-based Archstone-Smith, added $47.5 billion to the total all by themselves. The two deals, both fueled with cheap debt, ranked among the biggest deals in the country that year.

Still, M&A activity was down all across the board. The two biggest deals of 2008 - the only two to top $1 billion in value - would have struggled to crack 2007's Top 10.

Most of the deals in 2008's Top 10 were struck earlier in the year, at least before September, when the magnitude of the financial system's crunch became clear. That's when the true dealmaking slowdown occurred.

"By Sept. 1, you had the worst of both worlds: the old expectations of the sellers vs. the new reality of what the market will bear," said Warren Henson, president of Denver-based investment bank Green Manning & Bunch.

Historically, said Wayne Nielsen of W.G. Nielsen & Co., the fourth quarter is the slowest. The economic turmoil just compounded that, he said. "In the fourth quarter, a lot of deals didn't get done," he said.

Both men say that good, growing businesses with strong management can still find sellers. "But a lot of companies are struggling, and others are just not coming to market."

milstead@RockyMountainNews.com or 303-954-2648.

10 biggest Colorado deals of 2008

1 Douglas County-based UDR said it will sell apartment homes to multiple acquirers for $1.7 billion (announced in January).

2 Denver-based Prologis sold its China operations and property interests in Japan to the Government of Singapore Investment Corp. for $1.3 billion (December).

3 Denver-based Forest Oil agreed to buy natural gas and oil properties in Texas and Louisiana from closely held Cordillera Texas LP for $905 million (August).

4 Rapid City, S.D.-based Black Hills Corp. sold seven power plants, including three in Colorado, to two investment funds for $840 million (April).

5 Houston-based El Paso Pipeline Partners LP acquired interests in two natural gas companies, including a 30 percent interest in Colorado Interstate Gas Co., from El Paso Corp. for $736 million (September).

6 Douglas County-based Liberty Media bought an additional stake in New York-based IAC/Interactive for $485 million (January).

7 Fort Collins-based Woodward Governor acquired Skokie, Ill.-based MPC Products for $383 million (August).

8 Denver-based Whiting Petroleum bought interests in producing gas wells and development acreage in the Flat Rock Natural Gas Field in Uintah County, Utah, from Chicago Energy Associates LLC for $365 million (May).

9 Boulder-based data storage company LeftHand Networks sold itself to Hewlett-Packard for $360 million (October).

10 Williams Cos. bought interests in Colorado's Piceance Basin from Oklahoma City-based SandRidge Energy for $285 million (May).