Click here for printer friendly page
2005 was best year for M&A since 2000 30/05/2006. Source: ACG, Thomson Financial. 
 On the heels of strong M&A transaction levels in 2005, 85 per cent of area investment bankers, private equity professionals, and corporate executives surveyed in the ACG/Thomson DealMaker's Survey say the current environment for mergers and acquisitions and corporate growth is good or excellent.
This is the same as the June 2005 survey results.
According to Thomson Financial, 2005 was the best year for global M&A activity since 2000. Worldwide, $2.70 trillion of mergers and acquisitions were announced. In the United States, $1.13 trillion of deals were announced.
"It has been a good year for many Cleveland dealmakers. Many private equity firms have made and exited good investments, and are having success raising their next funds, while investment bankers are helping broker many deals. It's a steady, robust market right now," said Guy Fabe, president of ACG Cleveland, and director at PricewaterhouseCoopers.
Mergers and Acquisitions
Area dealmakers see the following sectors experiencing the most merger activity in 2006:
1. Manufacturing and distribution (30%)
2. Technology (26%)
3. Business services (16%)
4. Healthcare and life sciences (14%)
5. Financial services (7%)
6. Consumer products and services (1%)
7. Retail (3%)
Cross-Border M&A
More than a third (44%) of area dealmakers expect to be involved in an international cross-border deal in 2006. Geographically, they anticipate these deals will be with:
1. Canada (47%)
2. China (43%)
3. Western Europe (34%)
4. Latin America (21%)
5. Eastern Europe (17%)
Survey respondents say the primary objective of mergers and acquisitions today is to:
1. Increase revenues and profitability (55%)
2. Grow market share (34%)
3. Diversify geographically (4%)
4. Acquire a competitor (3%)
5. Gain technology (1%)
6. Enter new industry (1%)
Organic Growth
Survey respondents say the sectors that will experience the most organic growth are:
1. Healthcare, life sciences (33%)
2. Technology (21%)
3. Business services (18%)
4. Manufacturing and distribution (12%)
5. Consumer products and services (8%)
6. Financial services (4%)
7. Retail (3%)
Executives are also bullish on organic growth based on these elements serving as primary factors fueling organic growth in 2006:
1. An improved domestic economy (60%)
2. Ability to charge higher prices (22%)
3. Historically low interest rates (14%)
Executives caution, however, that energy costs (34%), rising interest rates (29%), inflation (10%), and high cost of labor (8%) are potential impediments to further organic growth.
Private Equity
The private equity deal size and type that hold the most promise are:
1. Middle market buyouts and recapitalizations (57%)
2. Small buyouts (26%)
3. Early stage venture capital (6%)
4. Later stage venture capital (6%)
5. Mezzanine (3%)
6. Mega buyouts (3%)
Geographically, the areas with the greatest potential for private equity investments are:
1. United States (69%)
2. China (17%)
3. India (9%)
4. Eastern Europe (3%)
In an increasingly competitive environment, the primary reason Ohio private equity professionals won their most recent deals is:
1. Pre-existing relationship with company management (47%)
2. Reputation or brand of their firm (37%)
3. Industry sector knowledge (30%)
4. Lack of competition (17%)
5. Paid highest price (17%)
Survey Methodology
The survey, conducted in December 2005, was completed by 1,977 ACG members and Thomson Financial customers, including 74 Ohio dealmakers. State respondents were comprised of private equity, venture capital and buyout firm members (16%); investment bankers, intermediaries, brokers (27%); lenders, finance providers (11%); corporate professionals, entrepreneurs (22%); and service providers, such as lawyers, workout specialists, accountants and consultants (24%).
Founded in 1954, the Association for Corporate Growth is a global association for professionals involved in corporate growth, corporate development, and mergers and acquisitions. Today ACG stands at more than 8,500 members from corporations, private equity, finance, and professional service firms representing Fortune 500, Fortune1000, FTSE 100, and mid-market companies in 46 chapters in North America and Europe.
Thomson Financial is a US$1.5 billion provider of information and technology solutions to the worldwide financial community. Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results.
|
