KPMG Global M&A Predictor forecasts global M&A market to re-open for business during 2010
18.02.2010Company: KPMG Česká republika, s.r.o.
KPMG International’s study predicts modest increases in both M&A appetite and capacity for the coming year.
In the Czech Republic, the gap between buyers‘ and sellers‘ price expectations has narrowed making more deals doable. At a sector level, we will see continued activity in non-cyclical industries (i.e. ones that have been less affected by the recession) including food, healthcare and pharmaceuticals. We also expect strong activity in energy and raw materials and also a renewed activity in cyclical consumer goods.
We also anticipate that in 2010, the forced sales of distressed companies will continue on the back of restructuring in sectors such as real estate, automotive and industrial. In this area, we will see more bargain purchases by cash-rich investors, by both corporates and local private equity players as mentioned above.
The credit market freeze has ended but banks will certainly remain more conservative than in the glory days. Leveraged deals will require much a greater equity portion and higher collateral. Companies will also continue to look internally to raise finance. This can be by the sale of a subsidiary or non-core business. We have already seen the squeezing of working capital and in particular by de-stocking. Lastly, we will also see dilution of ownership stakes (either by private sale or IPO) to raise cash for acquisitions elsewhere.
“It is important to note that our Global M&A Predictor is principally focused on corporate activity. Even though we have seen some resurgence in private equity deals, that sector of the market will continue to be hampered by a shortage of debt, putting it at a comparative disadvantage to corporates. The Predictor shows that corporate appetite and capacity are expected to increase - so we may confidently expect that corporate M&A will lead the way in 2010,” concluded Alex Verbeek, CEE Chairman of KPMG’s Corporate Finance.
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