Industry leaders are split on whether the federal government’s actions over the past year have had any impact on the mergers and acquisitions sector but are cautiously optimistic for the months ahead, according to the 2009 M&A Outlook Survey from law firm Dykema. A majority (80 percent) of respondents predict an increase in distressed transactions in the coming year.
"Confidence in the U.S. M&A market is starting to improve; 81 percent of industry executives surveyed are expecting the market to be neutral or strong over the next 12 months," says Dave Cellitti, leader of Dykema’s M&A practice. "When we asked the same question a year ago, almost half of respondents predicted the market would be weak in the following year."
In 2008, only 16 percent believed the U.S. M&A market would be strong in the following year, down from a high of 63 percent of respondents in 2006. This year, 28 percent of respondents predicted a strong market and just 19 percent had a weak outlook. And confidence in the economy continues to strengthen. In 2005, 51 percent had a positive outlook on the economy, but that number dropped to just eight percent last year. About a third (35 percent) of respondents to the 2009 survey have a positive outlook on the U.S. economy in the coming year.
Industry executives believe a number of distressed transactions remain in the pipeline which means opportunities will be available in 2010 for buyers with cash and financing," said Dykema corporate finance practice group member Jin Koh. "About half of the survey respondents said they were involved in a deal that didn’t close over the past year, and more than three quarters are seeing deals structured differently in the current economic climate.”
Respondents are split on the issue of how the federal government's actions within the past 12 months have impacted the U.S. M&A market. Twenty-seven percent think the federal government has made a positive impact/increased activity, 22 percent think it has made a negative impact/decreased activity, and 50 percent think the government’s actions have made little to no difference.