Survey: M&A volume at bottom, will improve in 2nd half of '08
Dayton Business Journal
Middle market mergers and acquisitions professionals are frustrated with the current M&A environment. But they believe the volume of deals has bottomed out and are optimistic about the second half of 2008, according to a report released Tuesday.
In its twice-yearly survey, the Association for Corporate Growth (ACG) and Thomson Reuters reported that only 43 percent of middle market M&A dealmakers believe the current M&A environment is good. That's down significantly from a year ago, when the figure was 93 percent.
Nearly half of the more than 500 investment bankers, private equity professionals, corporate development executives, lawyers, accountants and business consultants polled say the greatest obstacle to M&A activity is the weak economy, the report said.
The volume of worldwide mergers and acquisitions totaled $1.6 trillion in the first half of 2008, a decrease of 36 percent over the record-breaking first half of 2007, according to Thomson Reuters.
Of this total, M&A deals in the middle market -- transactions under $500 million -- fared better, declining by 18.2 percent to $368.9 billion.
Despite the decline, 32 percent of those surveyed said the number of M&A transactions will increase in the second half of the year, up from only 25 percent six months ago. Twenty-eight percent say merger volume will decrease, while 39 percent say it will remain the same.
Another notable survey finding is the emergence of a buyer's market. Respondents indicated that the balance of power between buyers and sellers of businesses was upended over the past year, with 68 percent saying it is now a buyer's market and 11 percent calling it a seller's market. In June 2007, those figures were 13 percent and 75 percent, respectively.
"It has taken a long time for the pendulum to swing, but market conditions clearly favor the buyer, and this is one of the most significant changes we've seen," said Jim Beecher, publisher of Buyouts Magazine. "It can take a while to realize profits, but private equity performance can thrive in an environment such as this. For the right acquisitions made at a more reasonable price, there will be big gains to be made once the economy rebounds."
The survey, conducted in June, was completed by 542 ACG members and Thomson Reuters customers. Respondents included: private equity, venture capital and buyout firm members (21 percent); investment bankers, intermediaries, brokers (28 percent); lenders, finance providers (10 percent); corporate professionals, entrepreneurs (15 percent); and service providers, such as lawyers, workout specialists, accountants and consultants (26 percent). The majority of respondents were from the United States (453), where 39 states were represented. Internationally, executives from 21 countries completed the survey.
E-mail dayton@bizjournals.com. Call (937) 528-4400.
Latest News |
Most Viewed Stories |
Most Emailed Stories |
