With the economy steadily improving over the course of the year, many experts believed that 2010 would be prime for some significant corporate growth and M&A activity.
During the “Great Recession,” many companies were hesitant to invest significant amounts of money in organic growth. Many more felt that keeping large amounts of cash on hand would be wise for fear that another credit crunch would leave them unable to borrow.
The end result was an improving economy with many companies sitting on piles of cash that was doing nothing for them. That cash in hand was providing no return or working to make additional profits for the companies.
Coming out of a slow 2009 with very little organic growth, companies also felt pressure to show some kind of growth for 2010. With organic growth still difficult to come by in a recovering, but sluggish, economy, acquisitions became increasingly attractive.
Between the piles of cash and pressure to show growth, it was the perfect storm for M&A activity to take off. And boy did it!
According to Thomson Reuters data, M&A activity grew nearly a fifth this year to a tune of $2.25 trillion, globally. Emerging markets made up 17 percent of the transactions and the energy sector was the busiest.
With the New Year just days away, this is all old news! What matters is what will happen in 2011, and luckily, things aren’t expected to slow down one bit.
The continued pressure to show growth, increased liquidity, amiable financing terms and the continued presence of cash on hand are expected to continue to drive M&A activity in 2011.
According to a recent article in Businessweek, there are a handful of markets that can be expected to see significant M&A activity, including:
- Consumer products
- Financial services
Also expected to see significant M&A activity is the airline industry and deals across borders as companies from Asia and Brazil step into the fray.
These projections are very much in line with what ACG members and other thought leaders in business and finance said in our recently released survey. According to the survey, an overwhelming percentage of the 473 respondents were confidant about the improving economy and expected increased M&A activity moving forward.
2010 was an exciting year for those interested in corporate growth and M&A. After activity fell off of a table for a few years during the economic downturn, the market swung back around and drove upwards tremendously. What’s better…it shows no signs of slowing down.
Here’s to an incredible 2011. May it be filled with an improved economy, continued corporate growth and prosperity for everyone, both in the Nation’s Capital and across the country.