Daily News: March 7, 2013

KPMG Survey: 2013 M&A Activity to Outpace 2012


According to a survey conducted by KPMG, private equity and tax professionals from the technology, financial services and healthcare sectors, among others, expect an increase in their companies’ or clients’ deal activity in 2013 compared to 2012. Of the more than 400 survey respondents, 60% said that they would do more deals this year than last year.

KPMG said the simpler financing terms associated with smaller deals, as compared to both large transactions and the megadeals will drive middle-market M&A activity in the balance of 2013, according to 24% of the poll population. However, 49% of respondents felt that collectively, simpler financing terms, fewer risks and integration challenges, as well as the less complexity of due diligence that’s needed for deals valued under $250 million, will serve as the catalyst for a deal market dominated by middle-market activity in 2013.

In fact, 22% of survey respondents indicated that in 2013 thus far, the deal market is already experiencing a high volume of middle-market activity; they also acknowledged favorable credit terms (11%) and elevated levels of cash on corporate balance sheets (8%) as driving the recent deals in the marketplace. Corporate buyers have the advantage in the M&A space over private equity buyers (6%) halfway through the first quarter of 2013.

“The underlying fundamentals in the deal market are improving, with the combination of a stabilizing U.S. economy, favorable credit terms, open debt markets, and high cash balances paving the way for an increase in M&A volume this year,” said Dan Tiemann, Americas lead for KPMG’s Transactions & Restructuring practice. “As a result, companies may be highly motivated to execute transactions that drive their growth agendas, including deals that allow for business transformation and optimize new operating models.”

When asked what effects new regulations might have on their ability to do deals in 2013, 21% of the poll population stated that they will cause integration challenges during the M&A process and in post-deal phases for their companies and clients. Eighteen percent cited that new regulations have temporarily delayed their ability to do deals, followed by 7% who have delayed M&A activity indefinitely; however, another 7% cited they will actively pursue deals because of new regulation.

The breakdown of respondents includes M&A professionals in the following sectors: technology (17%); financial services (17%); healthcare (14%); diversified industrials (9%); energy (8%); and consumer markets (7%).