M&A Survey: 'It's a Seller's Market'

ADVANCED SEARCH

READER'S CHOICE
Most Popular Stories

• Purvis Industries Buys Bearing Belt Chain
• One Distributor's Experience in Greening Its Warehouse
• Latin America Manufacturing Production Growth to Slow
• Owens & Minor to Sell Direct-to-Consumer Diabetes Business
• The Year in Distribution: 2008

HOME
ABOUT MDM
CONTACT US
CUSTOMER SERVICE

E-Mail This Article

Printer-Friendly Version

Microsoft

Untitled Document

July 19, 2007

M&A Survey: 'It's a Seller's Market'

A record $2.7 trillion in first half 2007 worldwide mergers has led dealmakers to call the current M&A environment good or excellent (93%), according to a new survey by Association for Corporate Growth (ACG) and Thomson Financial.

However, there is growing concern among private equity professionals – who have played an increasingly important role in the merger boom – that the easy availability of debt financing which has helped fuel transactions will tighten, with 68% saying the debt markets will be worse in the next year.

The ACG/Thomson DealMakers Survey polled 1,011 investment bankers, private equity professionals, corporate development officers, as well as lawyers, accountants and other service providers involved in the deal economy in June 2007.

“With increasingly active corporate acquirers with global ambitions, financial acquirers raising large new funds and quickly making substantial investments – and dealmakers of all types doing more cross-border deals – I am confident that we will shatter all M&A records this year,” said Daniel A. Varroney, president and CEO of the Association for Corporate Growth.

“It’s a seller’s market right now, and private equity firms’ portfolio companies are doing well, increasing revenues and employment, and fueling economic growth. Private equity is making a substantial contribution to our continued economic expansion, and significantly outpacing the returns of the Standard & Poor’s 500 over the last five years. The big question right now is will legislation or tighter debt markets end this extraordinary boom.”

About three-fourths of respondents said it is best to be on the seller side of a transaction today.

Half of dealmakers polled expect to be involved in a cross-border deal during the second half of 2007, and 39% say cross-border deals are becoming more important to their firms. Geographically, they anticipate these deals will be with: Western Europe (49%), Canada (40%) and China (34%). In first half 2007, European deals increased 77% to $1.04 trillion, even more than the 52% increase to $1.1 trillion in the United States.

Total mergers in the first half of this year are 67% higher than last year’s first half total, and surpassed the previous first-half record of $1.93 trillion set in 2000, according to Thomson Financial. Private equity-backed buyouts accounted for 36% of total U.S. M&A volume during the first half of 2007, compared to 24% during the first six months of 2006.

Manufacturing and distribution was listed by 15% of respondents as one of the hottest sectors in M&A. Also included was technology and healthcare/life sciences.

Private equity professionals reported the greatest opportunities for liquidity events for their portfolio companies in the next six months are: Sale to strategic buyer (50%), sale to financial buyer (32%), merger (8%) and IPO (6%).

The Association for Corporate Growth is a global association for professionals involved in corporate growth, corporate development, and mergers and acquisitions. Thomson Financial is a provider of information and technology solutions to the worldwide financial community.

Want to learn more about M&A in distribution markets? Check out MDM's Special Report on Distribution M&A in 2007, or the CD package of MDM's recent audio conference, "Distribution M&A 2007 Update: More Buyers, New Drivers in U.S., Overseas."

More Breaking News