Cross-Border Deals to Boost Demand for Investment Professionals
2007 has been a banner year for global mergers and acquisitions. Through mid-December, global announced M&A activity shattered all previous records to reach $4.35 trillion, a 20% increase over last year’s record, according to Thomson Financial. But, as the year draws to a close, the credit crisis has undoubtedly left its mark on dealmakers’ sentiments and the vast majority of buyouts are categorized as smaller to middle-market sized deals. Although they are less bullish than they were 6 months ago, nearly 75% of merger professionals still have a positive view of the current M&A environment, according to the ACG/Thomson DealMakers Survey.
Investment professionals are increasingly eyeing more distressed deals and cross-border deals to invest and grow their businesses. As dealmakers look to Canada, Asia and Europe, executive search firm, A.E. Feldman, says experience and contacts in those markets will be in demand. The firm also reports that there is a strong need for tax professionals with transaction and due diligence experience in M&As.
Investment professionals are increasingly looking at cross-border deals, according to the ACG/Thomson DealMakers Survey, which polled 813 investment bankers, private equity professionals, corporate development officers, as well as lawyers, accountants, consultants and other service providers last month. Although nearly half of those polled have not done a cross-border transaction in the last year, 56% believe that they will do so in the next six months. The areas in which they are most likely to be involved: Western Europe (53%), Canada (45%), and China (37%).
Cross-border M&A has truly become a global strategy as companies look for top and bottom line growth. Cross-border M&A activity contributed to much of this year’s volume, accounting for a record 47% of announced deals this year, according to Thomson Financial. ”On a global basis, U.S. dealmakers continue to look outside of the U.S. for investment opportunities, while the weak dollar is starting to attract non-U.S. investors to seek U.S. based investment. All in all, middle market private equity looks to remain a vibrant sector of the overall U.S. capital market,” says James P. Marra, President of ACG Cleveland and Principal, Director of Business Development with Blue Point Capital Partners.
Dealmakers also anticipate fewer buyouts in the next six months, but they see more distressed deals are on the horizon. The ACG/Thomson survey finds that while 75% predict fewer buyouts, 93% expect more distressed deals and 80% say they are not modifying their investment strategy. Dealmakers, however, are generally optimistic that the debt markets will be in better shape a year from now, with 45% saying they will be a little better, and 7% saying they will be much better.
