ACG/Thomson 2006 DealMaker’s Survey records highest ever confidence level by M&A professionals: 2005 was best year for M&A since 2000, according to survey
On the heels of strong M&A transaction levels in 2005, a record number – 97% -- of Denver-area investment bankers, private equity professionals, and corporate executives surveyed in the ACG/Thomson DealMaker’s Survey say the current environment for mergers and acquisitions and corporate growth is good or excellent. This is a 17% jump from the June 2005 survey results.
DENVER, CO (PRWEB) January 10, 2006
On the heels of strong M&A transaction levels in 2005, a record number – 97% -- of Denver-area investment bankers, private equity professionals, and corporate executives surveyed in the ACG/Thomson DealMaker’s Survey say the current environment for mergers and acquisitions and corporate growth is good or excellent. This is a 17% jump from the June 2005 survey results.
According to Thomson Financial, 2005 was the best year for global M&A activity since 2000. Worldwide, $2.70 trillion of mergers and acquisitions were announced. In the United States, $1.13 trillion of deals were announced.
“It has been a good year for many Denver merger and acquisition professionals. Many private equity firms have made and exited good investments, and are having success raising their next funds, while investment bankers are helping broker many deals. It’s a hot and competitive market right now.” said David Mead, President of ACG Denver (www. acg. org/denver (http://www. acg. org/denver)), and President and CEO of The Mead Consulting Group. “Additionally, the first baby boomers turned age sixty in 2005. We are beginning the early stages of what is projected to be the greatest wave of business transition in U. S. history over the next decade,” Mead added.
Mergers and Acquisitions
Area dealmakers see the following sectors experiencing the most merger activity in 2006:
1. Technology (32%)
2. Manufacturing and distribution (21%)
3. Healthcare and life sciences (16%)
4. Business services (9%)
5. Consumer products and services (9%)
6. Financial services (7%)
7. Retail (2%)
Cross-Border M&A
More than one third (35%) of area dealmakers expect to be involved in an international cross-border deal in 2006. Geographically, they anticipate these deals will be with:
1. Western Europe (36%)
2. China (39%)
3. Canada (33%)
4. Latin America (27%)
5. Eastern Europe (21%)
Survey respondents say the primary objective of mergers and acquisitions today is to:
1. Increase revenues and profitability (50%)
2. Grow market share (36%)
3. Acquire competitor (3%)
4. Gain technology (2%)
5. Gain talent (2%)
6. Enter new industry (2%)
7. Diversify geographically (2%)
Organic Growth
Survey respondents say the sectors that will experience the most organic growth are:
1. Healthcare, life sciences (33%)
2. Technology (18%)
3. Business services (15%)
4. Manufacturing and distribution (13%)
5. Financial services (8%)
6. Consumer products and services (8%)
Executives are also bullish on organic growth based on these elements serving as primary factors fueling organic growth in 2006:
1. An improved domestic economy (80%)
2. Ability to charge higher prices (10%)
3. Historically low interest rates (8%)
Executives caution, however, that rising interest rates (24%), energy costs (29%), high cost of labor (14%), and inflation (10%) are potential impediments to further organic growth.
Private Equity
The private equity deal size and type that hold the most promise are:
1. Middle market buyouts and recapitalizations (56%)
2. Small buyouts (38%)
3. Early stage venture capital (6%)
Geographically, the areas with the greatest potential for private equity investments are:
1. United States (81%)
2. China (6%)
3. Western Europe (6%)
In an increasingly competitive environment, the primary reason area private equity professionals won their most recent deals is:
1. Reputation or brand of their firm (60%)
2. Lack of competition (33%)
3. Industry sector knowledge (27%)
4. Pre-existing relationship with company management (20%)
5. Paid highest price (13%)
Survey Methodology
The survey, conducted in December 2005, was completed by 1,977 ACG members and Thomson Financial customers, including 61 Denver-area dealmakers. State respondents were comprised of private equity, venture capital and buyout firm members (13%); investment bankers, intermediaries, brokers (25%); lenders, finance providers (5%); corporate professionals, entrepreneurs (18%); and service providers, such as lawyers, workout specialists, accountants and consultants (38%).
About Thomson Financial
Thomson Financial is a US$1.73 billion provider of information and technology solutions to the worldwide financial community. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation(www. thomson. com), a global leader in providing integrated information solutions to more than 20 million business and professional customers in the fields of law, tax, accounting, financial services, higher education, reference information, corporate e-learning and assessment, scientific research and healthcare. With revenues of US$8.10 billion, The Thomson Corporation lists its common shares on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC).
About ACG Denver
The Association for Corporate Growth (www. acg. org/denver (http://www. acg. org/denver)) is the premier global association for professionals involved in corporate growth, corporate development, and mergers and acquisitions for mid to large companies. Leaders in corporations, private equity, finance, and professional service firms focused on building value in their organizations belong to ACG. They recognize the multiple benefits of networking within an influential community of executives growing public and private companies worldwide.
Contact:
Betsy Martin
Decibel Communications
303-680-7004
Cell 303 818 3114
Betsy @ decibelcommunications. com
-OR-
Michele Gebhart
Executive Director, ACG Denver
303-907-3757
Acgdenver @ acg. org
Additional Contacts:
Bill Haynes
President
BackBay Communications
617-372-4314
Bill. haynes @ backbaycommunications. com
Kerri Shepherd
Manager, Public Relations
Thomson Financial
646-822-2077
Kerri. shepherd @ thomson. com
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