Global M&A Activity Poised for Major Uptick, Say Leading M&A Advisors in 6th Annual Brunswick Group M&A Survey
Leading M&A practitioners are the most bullish on deal activity since the collapse of the last buyout boom with 97% of North American advisors forecasting an uptick from 2012. The primary driver of this optimism, the strongest in the six years this survey has been conducted, is greater confidence among CEOs and in the Board room (64%), followed by optimism of a burgeoning economy (53%) and the ready availability of inexpensive debt (45%).
The 6th Annual Brunswick Group M&A Survey polled over 100 top advisors from North America, Greater China, and Europe. Results were released ahead of the 25th Annual Tulane University Law School Corporate Law Institute conference, an annual gathering of the deal community that draws lawyers, bankers, Delaware judges and other market participants.
Responding to views on the current deal landscape and trends, advisors from these three regions uniformly see strong deal prospects in 2013. However, Greater China and Europe-based advisors have somewhat more tempered views on M&A, both within their regions and globally, than those in North America. Two thirds (67%) of advisors surveyed in Greater China predict an uptick in domestic M&A while three fourths (74%) expect M&A on a global scale to increase. Among European-based advisors (included in this survey for the first time), three in five (61%) predict an increase in European M&A activity, while nine in ten (88%) see global M&A rising.
“Cheap money, a buoyant stock market and rising CEO and Board confidence are ideal ingredients for a significant boost in M&A activity in 2013,” said Steve Lipin, senior partner, Brunswick Group. “If the deal community is right, it is le bon temps rouler for the deal business.”
Ripest Sectors for Consolidation
For the first time, North American advisors see consumer goods (31%) as the busiest sector for consolidation, ahead of long time staple technology and telecoms (22%) and newcomer energy (15%). After several years, healthcare has dropped out of the top three with only (14%) of advisors seeing it as active for deal activity (down from 21% in last year's survey of North American advisors). Chinese advisors see manufacturing (20%) and technology (20%) as the most popular sectors, while Europe-based respondents see financial services (24%), energy (24%) and industry/engineering (18%) as the ripest for consolidation in 2013.
Domestic Deals to Drive US Activity
Nearly three-fourths (71%) of North American advisors see domestic strategic plays as dominating the deal market versus cross-border engagement. In terms of inbound activity, 61% of North American advisors believe the most inbound deals will originate in Greater China (a decline from 2012 which saw Greater China peak at 78%), compared to 23% for Europe and 11% for Latin America, a notable increase from 4% last year. Three in five (61%) North American advisors see corporate spinoffs and divestitures in North America rising in 2013 compared to 2012 levels, while 33% see the level staying the same and 3% see a decrease in 2013.
LBOs to Make a Return
Four in five (89%) advisors in North America believe mega deals and private equity driven leveraged buyouts will be on the upswing in 2013. One in five (22%) advisors see PE firms and strategic buyers pursuing acquisitions during bankruptcy while four in five (78%) believe they will wait for the Chapter 11 process to come to a conclusion before pursuing acquisitions. European advisors predict that distressed assets will go to a mix of private equity (50%) and strategic buyers (39%), tracking with expectations in the US (49% private equity, 32% strategic buyers), but differing from China where strategic buyers are expected to lead private equity in terms of buying distressed assets, 46% vs. 29%, respectively.
Deals More Likely in All Cash Than Coupled with Equity
Given the ready availability of low-cost debt, for the fourth consecutive year advisors in North America expect an increase in the number of deals being done with all cash (69%), as opposed to a mix of cash and stock (27%) or all stock (5%). Consistent with these findings, 78% advisors surveyed in Europe expect to see all cash deals while 22% expect a mix of cash and stock transactions. Fifty-eight percent of respondents in Greater China expect all cash deals, while 42% predict a mix of cash and stock.
SOEs Eyeing Opportunities in US, Europe
Advisors in Greater China see State Owned Enterprises (SOEs) expanding internationally with 69% identifying growing appetite among these companies for outbound acquisitions in 2013. None of the China-based advisors see inbound pursuits driving M&A in 2013. Three in five (59%) European advisors believe inbound deals will drive the global M&A market, a contrast with advisors in North America and China who see a very minor portion (18% and 0%, respectively) of deals being driven by inbound activity in their regions.
The survey was distributed to Brunswick's proprietary database of leading M&A advisors and consultants in March 2013. The results were analyzed by Brunswick Insight, the firm's specialist opinion research practice, focusing on understanding the views of opinion formers around the world.
The full survey results can be found on the Brunswick Group website at: www.brunswickgroup.com/insights-analysis/surveys.aspx.
About Brunswick Group
Brunswick Group LLC is a private partnership with a growing team of approximately 600 employees, including more than 90 partners around the world. The firm has grown organically over 25 years and now has 21 wholly owned offices in 12 countries. These include Abu Dhabi, Beijing, Berlin, Brussels, Dallas, Dubai, Frankfurt, Hong Kong, Johannesburg, London, Milan, Munich, New York, Paris, Rome, San Francisco, Shanghai, São Paulo, Stockholm, Vienna and Washington D.C. The firm's service offer comprises corporate and financial communications, investor relations, internal communications and opinion research.
Brunswick was number one in M&A communications for 2012 as ranked by Mergermarket.
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