Trends in M&A
Prof. Hilal Kiymaz bietet eine kurze Übersicht der Trends am M&A MarktWhich impact has the current economic dynamics on the M&A market? How did the economic crisis change the M&A market and the processes?
Clearly M&As activity has been down since 2008. These are the result of declining equity values to finance the acquisitions, inability firms to borrow to finance the deal. Furthermore many firms tend to put hold their major projects including acquisitions during the economic downturn.
The upward trend of cross-border M&As since 2004 changed and the number of deals went down drastically. Only Asian firms experienced increase in their M&As activities during the last two years. As far as industries are concerned, energy, utilities, pharmaceuticals, and healthcare sectors experienced higher volume during 2009 and 2010.
For example, global M&As activities was about $2.4 trillion, about 20% higher than previous year. As the economic recovery continues, M&As is expected to go up sharply in 2011. According to KPGM survey of executives, more than two third of the participants indicated that they are more optimist about the deal environment today than they were a year ago. The factors include increase in buyer’s confidence, more stable economic environment, and debt and equity market beginning to support merger activities.
What are the key learning out of the last years for a future M&A strategy?
To identify successful acquisition strategy, we need to start with the fact that each deal has its own unique characteristics. The important factor determining the success of a deal is perhaps to have a well-defined strategic logic with the acquisition.
It should include value creation proposition which mostly related to improving the performance of target being acquired, expansion to additional markets/product mix, acquiring product or technologies that would be costly to develop internally. Typically acquisition with soft synergy (mostly revenue based) will less likely create any value. On the other hand, acquisitions decisions based on hard synergies (i.e. realistic cost savings) tend to create value.
Which M&A trends can be identified in the different regions (US, EC, China, India, Brazil,..)?
As U.S. market has always had the highest volume of M&As activities. In the years prior to the economic crises, Europe was experiencing very high volume of activity. For this year, the market expects North America to have the year’s most active M&A market.Other active markets are expected to be China and India.
Recent M&A activity (2010) supports these expectations. Among the emerging markets, China has been the most active in M&A, accounting for one fourth of emerging markets activity. Mexico and Russia follows Chine. But overall, North America remains the world leader in M&A volume.
See also: KPMG Survey 2011: „Confidence grows for M&A in 2011”