News & Insights

Dykema Announces Results of 10th Annual Mergers & Acquisitions Outlook Survey

A Decade’s Worth of Data; Cautious Optimism for M&A and Economy Returns This Year

October 30, 2014

In Dykema’s 10th annual 2014 M&A Outlook Survey, respondents reported cautious optimism this year about the economy and its impact on current and future M&A activity. 

Survey respondents from 13 different sectors, in such areas as automotive, technology and financial services, answered questions about how the U.S. economy and domestic and global matters will impact the M&A market. The survey provides a snapshot of the M&A market and the economy this year and how it compares to the past decade. 

Though many signs point to a full recovery following the recession, the memory of 2008’s economic downturn still lingers. When compared to 2013, more respondents this year (62 percent) are positive about the U.S. economy in the next year, yet fewer respondents (59 percent) felt the M&A market would be stronger during the same time period next year. In the inaugural survey in 2005, 51 percent of respondents maintained a positive or somewhat positive outlook about the U.S. economy in the next 12 months; and 81 percent saw the future of the M&A market with that same positivity in the next year.

“While we have definitely experienced an uptick in M&A activity (particularly with respect to privately-owned businesses), this increased activity is tempered by a less than robust economic recovery,” said Jin-Kyu Koh, Leader of Dykema’s Corporate Finance Practice Group in the Business Services Department. “Based on the M&A work we are seeing and the data in this survey, we anticipate that M&A activity will at least remain at this level over the next 12 months.”

This year’s respondents found availability of capital to be the primary driver of M&A activity, whereas in the past two years the top driver was general economic conditions. For the first time, the survey asked respondents to weigh in on inversions and their impact on M&A – a topic that has recently garnered much attention. But 79 percent of this year’s respondents said they would not stop buying products from a company that engaged in a tax inversion transaction. And, 63 percent said the United States should not restrict or limit companies from doing tax inversions.

As Dykema works with more privately-owned businesses through its Family Business Transition Team, the firm asked respondents this year how this segment of the business world is being impacted by M&A activity. Eighty-two percent of respondents expected to see increased M&A activity among privately-owned companies.

According to Dykema, the survey yielded a number of other interesting conclusions, including:

  • Things are looking up. 62 percent of respondents are positive about the U.S. economy over the next 12 months compared to 2005 when only 51 percent of respondents were positive about the U.S. economy in the next year. This percentage dipped to as low as 8 percent in 2008.
  • Buyer’s interest. With so much available capital, 59 percent of respondents expect to be involved in an acquisition next year, while only 35 percent expect to be involved in a sale. 
  • Influencing the market. 43 percent of respondents say the availability of capital is most responsible for fueling M&A activity, and 25 percent cited the U.S. economy.

“Over the last decade, this survey has given us a unique window into the outlook of executives and advisors on the M&A market and the economy overall,” said David Cellitti, leader of Dykema’s M&A practice. “It’s interesting to see the evolution of this outlook reflected in our data over the past 10 years, especially the impact the economy has had on survey respondents’ impressions of the M&A market.”

In September, Dykema distributed the survey via e-mail to a group of senior executives and outside advisors including CEOs, CFOs and other company officers; 190 people responded. The results are being released at events in Detroit and Chicago on Oct. 30. 

Full results of the survey will be available October 31, 2014. For a copy, please contact any of the Dykema attorneys listed to the left or visit http://www.dykema.com/mergers/.