Daily News: December 3, 2014

KPMG: M&A Leading U.S. Growth Strategy

According to a survey by KPMG, merger and acquisition activity is reemerging as a leading growth strategy among U.S. organizations for 2015. Of the 738 M&A professionals, investors and advisors who participated in the survey, 82% anticipate that their U.S. companies or clients will initiate at least one acquisition in 2015, compared with 63% in 2014.

“Economic fundamentals that drive M&A are back at pre-crisis levels, with corporations holding large cash reserves, interest rates remaining historically low, consumer confidence improving and the U.S. dollar becoming stronger,” said Dan Tiemann, KPMG’s national leader for Transactions & Restructuring. “Organic growth often offers limited growth prospects, so buyers are paying a premium for targets that will allow them to realize long-term strategic goals and gain an advantage over the competition.”

Valuations are also expected to increase year over year, with fewer M&A professionals expecting to pursue deals under $250 million, and more respondents expecting to do deals valued upwards of $250 million, $500 million and $1 billion.

Forty-seven percent of respondents expect the most transaction activity in 2015 to occur in the technology sector, followed by the pharmaceutical & biotechnology (33%), financial services (30%), and oil & gas (27%) sectors.

A robust 73% expect the U.S. to be the most active market for transaction activity in 2015, up from 56% in 2014. This contrasts with drops in other regions, including in Western Europe, China and Brazil.

To read the full KPMG survey, click here.