Major companies are set to “throw off the shackles of austerity” and commit to significant mergers and acquisitions activity this year, a new study has concluded.
KPMG International’s latest global M&A predictor survey found signs of rising confidence among the world’s largest companies and an increasing appetite up 15% in the past six months to get involved in deal-making.
In the past two years, the trend has been for steadily rising capacity tempered by a slow decline in confidence.
However, KPMG said the latest study pointed to a turning of the tides over recent months a change in attitudes it described as “dramatic”, with confidence measures having risen in all almost every country covered by the data.
David McCorquodale, head of corporate finance at KPMG Scotland, said a lot had changed in six months.
He said: “The outlook for 2013 is more positive than it has been for over two years. Undeniably, this is a winning combination for the health of the global M&A market.
“Companies are ready to throw off the shackles of austerity in the hunt for new opportunities.”
“The US elections are over, the ‘fiscal cliff’ crisis has been averted or at least deferred and China has begun the transition to a new leadership team, so we can now see that there is more certainty than there was six months ago and that is feeding through into transactional confidence and capacity levels.”
The healthcare sector reported an 11% rise in appetite for M&A activity as well as a significant uplift (40%) in terms of capacity over the next year.
The technology industry was similar, with a reported 9% increase in appetite and a 32% rise in expected capacity.
The industrials sector was more buoyant, with M&A appetite up 22% while basic materials reported a 16% rise in capacity and a 37% jump in appetite.
“The uptick in appetite in the data chimes with our own experience on the ground, where we are seeing a number of big sell-side opportunities, particularly in consumer goods,” said Craig Anderson, a senior partner with KPMG Scotland.
“With many large consumer goods companies spinning off non-core business lines or seeking to tap into new high growth markets, we expect to see plenty more deals this year.
“The data also shows that the greatest appetite for deal-making is in basic materials and certainly the biggest deal in the market is in this sector.
“However, the return of bullish confidence should be tempered by news that regulatory uncertainty is delaying deal completions, not just in basic materials but also in the consumer goods sector.
“Dealmakers have to think very carefully about the regulatory environment and be prepared to invest time in meeting international regulators’ requirements.”