Survey Shows M&A Activity Likely to Heat Up

A survey by Brunswick Group LLC reveals that 78 percent of M&A advisers expect to see an increase in activity during the remainder of 2010, which is a sharp contrast to last year when 69 percent of respondents said it would take up to five years to return to the level of M&A activity seen in 2007.

The third annual survey polled 48 market participants in the M&A community, including bankers, lawyers and other advisors, and was released to coincide with the 22^nd annual Tulane University Law School Corporate Law Institute. Respondents cited a “psychological factor” rather than an economic factor as the catalyst for increased M&A activity.

Thirty-six percent of survey participants view CEO and board confidence as fueling the expected increase in deal flow. That factor outweighed the greater availability of credit and the low interest-rate environment (28 percent) and an improving equity market and buoyant stock prices (18 percent) as drivers of activity.

“This year’s results reveal a substantial change in sentiment in the M&A world and advisors appear to be quite optimistic that the deal activity we’ve seen in the first quarter of the year will continue and potentially accelerate during the remainder of 2010,” said Steven Lipin, senior partner, Brunswick Group.  “While it may be premature to sing Bon Temps Rouler, overall the community is feeling much more positive.”

Advisors predict that domestic transactions will overwhelmingly dominate the M&A market as only 14 percent believe foreign acquirers into the U.S. will lead deal activity. As for which region respondents anticipate foreign acquirers to come from, 50 percent point to Asia; 32 percent to Europe and 7 percent to the Middle East.