January 4, 2010
A 2010 M&A Forecast
Recently, PricewaterhouseCoopers Transaction Services released its annual year-end U.S. M&A forecast for 2010.
How accurate was the PwC Transaction Services 2009 M&A forecast? Here is what PwC says about that:
1. Troubled companies will look to align with larger, stronger players in order to survive, creating the perfect storm for mergers of necessity
Correct. 2009 saw patient buyers take advantage of favorable pricing to achieve their strategic goals.
2. Innovation will be a key for private equity to evolve as an industry in 2009.
Correct. Private equity firms have succeeded in getting creative to gain control of businesses through nontraditional means. Taking control of debt positions became a tool of choice by private equity to gain control of a company.
3. The new administration and the stimulus plan would generate opportunities for both private equity and corporate buyers in healthcare, technology and energy.
Too early to call. We may have overestimated the speed to which the stimulus would flow into the economy. We’ll see what 2010 holds.
4. More traditional consolidation will drive results in financial services in 2009.
Partially correct. There were some consolidation plays in banking and asset management; however, overall deal value was not significant related to recent years. The FDIC-assisted bank deals led the stats in terms of numbers.
5. Automotive and oil & gas M&A activity will remain quiet.
Correct. M&A activity was stagnant in these industries.
6. Emerging markets will lead us out of the slump in deal activity with Brazil, India and China as the key regions of focus for those who sat on the sidelines over the last five years.
Partially correct. It was certainly true for the equity markets in these regions. The jury is still out on the extent of emerging market M&A.