News & Insights

Market Data Corroborates Findings from M&A Survey

March 26, 2012

CHICAGO—In December 2011, Dykema finalized its 7th Annual Mergers & Acquisitions Outlook Survey Report, reflecting the perspectives of leading company executives and outside advisors on the direction of the M&A market in 2012.  

The survey revealed that after slowly increasing the last two years, confidence in the U.S. M&A market has dropped slightly. Twenty-six percent of industry leaders believe the market will be strong during 2012, down from 38 percent last year, while 57 percent are neutral on the outlook for the coming year. With the number of middle market M&A deals down by 5 percent in 2011, as reported by Thomson Financial, there is market support for this decline in respondents' confidence for this year.

The 2012 M&A Outlook yielded a number of other interesting conclusions, many of which have been corroborated by market data obtained since the release of the survey.

  • Respondents believe strategic buyers are most likely to increase their presence in the M&A market in 2012 (51 percent), a figure that has remarkably stood for the last four years. Financial buyers are most likely to decrease their presence (43 percent), which flip-flopped with foreign buyers this year. This perspective is consistent with market performance in 2011. As reported by William Blair & Company, private equity activity declined 1.8 percent in 2011, while overall dollar volume dropped 21 percent.
  • For the third consecutive year, strategic buyers (44 percent) were seen as the group most influencing deal valuations over the previous year. EBITDA multiples paid by strategic buyers in 2011 in middle market deals averaged 8.3 times over a half turn higher than 2010 levels according to Capital IQ. Financial buyers are not seen as driving valuations any more than they were a year ago. This is consistent with the decline in private equity activity for 2011.
  • China, Europe, India and Canada are named the most likely regions for foreign buyers in the U.S. M&A market this year. Respondents continue to look at China as the principal source for investors in U.S. companies, far outranking any other region. Interestingly, despite its current economic turmoil, Europe is named the second most likely region for U.S. investment. William Blair & Company reports that in 2011, the most active foreign buyers in the U.S. M&A market were Canada, United Kingdom and Japan.

Since its release, the survey has generated prominent media coverage in nearly 20 outlets reaching a strong cross-section of regional, national, business and financial audiences.

Coverage has appeared in the Wall Street Journal Private Equity Blog, Bloomberg News, SNL Financial, Financial News, Accounting Today, Deal Lawyers.com, Crain's Detroit Business, Chicago Daily Law Bulletin, MLive.com, The Oakland Legal News, M&A Chicago, The Holmes Report, The Detroiter, The Grand Rapids Press, Kalamazoo Gazette, West Michigan Business Review and MiBiz.

Our M&A Outlook surveys have proven to be a reliable and early indicator of the direction of M&A for the year ahead, and as we move forward in 2012 we will keep a watchful eye on the M&A market to see if findings from this survey will also  prove to be true.

For a full version of the survey results, please click here. Attorneys in Dykema's Mergers and Acquisitions practice regularly assist clients in all facets of M&A transactions. Feel free to contact us or any of the Dykema M&A attorneys with questions or comments about the report.