Nearly half of North American M&A bankers and lawyers told Brunswick Group that 2012 deal flow is expected to increase over 2011, while 42 percent see the environment remaining the same as a year earlier.
Brunswick also found that increased scrutiny of the private equity sector, fueled in part by Mitt Romney’s presidential bid, has three out of four dealmakers (76%) forecasting higher taxes on PE firms’ carried interest. Eighty-two percent, however, said the focus on PE will have no impact on M&A activity in 2012, while only 15% thought it may decline.
Asian buyers are expected to drive inbound U.S. deals, Brunswick found in its fifth annual survey (PDF) with more than 100 deal advisors responding. Fifty-two percent said they expect such transactions to drive the M&A market in 2012.
Respondents were asked what impact the European sovereign debt crisis will have on M&A activity in 2012.
Source: Brunswick
|
Tops among expected deals forecasted are domestic transactions among strategic buyers, cited by 80% of respondents asked what type will drive the market in 2012. U.S. acquirers of foreign companies were cited by only 33%, while domestic private equity transactions were cited by 29%. Sovereign wealth funds were mentioned by only 3%.
Advisors see several factors determining M&A activity in 2012, including economic conditions (cited by 70%), balance sheet cash/credit availability (63%) and CEO/board confidence (61%). Shareholder activism and investor pressure were cited by only 28%.
Half of respondents think there will be an increase in hostile takeover bids in 2012.
Seventy-seven percent predicted global M&A volume will hold steady or increase, with most activity centered on China and Brazil, forecast to be the busiest countries for M&A activity in 2012 by 69% and 65%, respectively. Canada was next at 46%, followed by Australia at 32%.
Respondents were asked whether a Chinese acquirer targeting a U.S. firm or a U.S. firm targeting a China operation has the easier path. Forty-four percent gave the nod to the Chinese acquirer coming to the U.S., while only 18% put the advantage with the U.S. acquirer. Thirty-eight percent both have issues.
Forecasting activity by sector, Brunswick respondents picked sectors most ripe for consolidation in 2012, leading with energy (55%), mining/natural resources (53%), healthcare (51%) and technology (47%).