News & Insights

Dykema Announces Results Of Fifth Annual Mergers And Acquisitions Industry Survey

October 28, 2009

Detroit

Dykema, a leading national law firm, today announced the results of its 2009 M&A Outlook Survey at its Annual Mergers and Acquisitions Seminar in Detroit. The fifth annual survey of industry leaders examined how changing public policy, the U.S. economy, financing challenges and other domestic and global matters will impact the M&A industry in the coming year. Executives are split on whether the federal government’s actions over the past year have made any impact on the industry and are cautiously optimistic for the months ahead.

"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," said 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 spite of the cautious optimism regarding the future of the M&A market, turmoil in the global financial markets continues to make financing challenging, and 80 percent of respondents predict an increase in distressed transactions 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. To take advantage of opportunities in the coming year, buyers and sellers will need to be flexible and creative in their approaches to get deals done," added Koh.

In September and October, Dykema distributed the survey via e-mail to a group of executives, bankers and advisors. Survey respondents were asked about the future of the market, cross-border deals and the general strength of the economy. Some survey highlights include:

  1. Confidence in the U.S. M&A market is starting to improve. In 2008, only 16 percent believed it 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.
  2. Like the U.S. M&A market, 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. Thirty-five percent of respondents to the 2009 survey have a positive outlook on the U.S. economy in the coming year.
  3. 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.
  4. Deals are not closing due to financing issues and material adverse changes in business. Forty-nine percent of respondents were involved in a deal that didn’t close, primarily due to financing or a material adverse change in business.
  5. There is a continued expectation that financial buyers will again decrease their presence in the market more than strategic and foreign buyers. Fifty-four percent predict financial buyers will further decrease their role and 51 percent believe strategic buyers will increase their presence in the M&A market.
At today’s M&A Seminar, Michigan company executives, bankers and outside advisors discussed the current and future state of the M&A market.

"The seminar was a unique opportunity for industry experts on both the company and advisor sides to come together and talk candidly regarding their perspectives on the future of the U.S. M&A market," said Dykema Corporate Finance practice group Member Doug Parker. "The financing difficulties of the past 18 months seem to be easing slightly and we’re seeing some new optimism about the future of M&A activity."

At the seminar, leading business and legal professionals analyzed trends and pitfalls impacting the U.S. M&A market. Topics covered included an overview of the M&A market, the impact of infrastructure deals on the market and financing deals in today’s economic climate. Panelists included industry professionals from Dykema, Amherst Partners, Huron Capital Partners, Donnelly Penman & Partners, Gates Group Capital Partners, HNTB Infrastructure, KPMG Corporate Finance, Glencoe Capital, Midwest Mezzanine Funds, P&M Corporate Finance and Bank of America.

For a copy of the full results of the survey, please contact Laura Miller at 312-252-4104 or (lmiller@greentarget.net) or visit www.dykema.com/corporate.