By Braun Jones, Partner, WWC Capital Group, LLC
Dealmakers appear to be getting over their cautiousness and are seeing the light at the end of the recession tunnel. According to the results of a recent survey conducted by the Association for Corporate Growth and Thomson Reuters, 85% of dealmakers expect an increase in M&A activity. The dealmakers surveyed included nearly 700 investment bankers, private equity professionals, corporate development officers, lawyers, accountants, and business consultants.
This is a significant improvement over last year’s survey, which showed only 56% of respondents predicting an increase. Dealmakers are more optimistic this year owing to expected increases in M&A activity in the following industries:
- Healthcare/life sciences: 20%
- Manufacturing and distribution: 20%
- Financial services: 13%
- Technology: 12%
Momentum appears to be building for companies searching for M&A opportunities. According to Thomson Reuters, the volume of all worldwide M&A deals totaled $573.3B during Q1 2010, which is a 21% increase over the Q1 2009.
Last week, I read a post on GigaOm by Om Malik regarding the sudden surge in technology M&A. Malik said he would not be surprised if there was a “drumbeat of deals.” Indeed, technology M&A growth is correlating with public company technology firm stock performance over the last 12 months which is up about 25%, although enthusiasm for tech stocks has cooled along with the broader market over the last six months.
This year, the technology sector has experienced the strongest start for M&A activity since the last big wave of deals in 2003 and 2007, according to a recent Reuters’ article. In Q1 2010, $68.8B worth of high-tech and telecom deals were announced, compared to $19.2B in Q1 2009. With the stock market getting hammered lately owing to European debt and other factors, one wonders how technology and broader market M&A will be affected.