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Spotlight On...
Transaction Advisory
SPOTLIGHT ON... Dan Tiemann, KPMG
“Last year, confidence increased in the U.S. market. According to KPMG’s 2014 M&A Outlook Survey, more than 60 percent of respondents said that they expected to be acquirers in 2014.”
D Q
an Tiemann is KPMG’s America’s Transactions & Restructuring Lead Partner. He has been a financial consultant to numerous
investors and lenders on more than 400 leveraged transactions. In addition, Dan has assisted numerous private equity investors in conducting due diligence and integrating target companies.
What aspects of transaction advisory have been the most in-demand over recent years? Why do you think this is?
One trend that has emerged over the last several years has been an increased emphasis on not only what companies are buying, but how they will integrate the transaction. Buyers always perform due diligence, maybe more thoroughly when the market is down, versus when the deal market is red hot, but buyers have always understood that they should perform a reasonable level of due diligence. I think the area that has changed, is that acquirers are preparing their integration plans earlier--during the buy side process to make sure there are limited post-close surprises. We have seen that integration is taking on an added importance for acquirers and has become a focal point, even in smaller deals.
Q
What other deal advice do you have for acquirers?
The most successful acquirers know either the specific companies they want
to acquire, or at a minimum, the specific markets they want to operate in. Successful acquirers don’t let the deal dictate their strategy, rather they have a clear strategy in place prior to entering into the deal. That approach is a critical component of the process. A second important part of the deal process, and one that is often overlooked, is an emphasis on execution. A clear focus on due diligence and integration will help a buyer minimize unpleasant surprises down the road and a focus on strategy and execution will help increase deal success and returns for investors and shareholders.
Q
Describe some of the deal trends that you are seeing in the marketplace.
Last year, confidence increased in the U.S. market. According to KPMG’s 2014 M&A Outlook Survey, more than 60 percent of respondents said that they expected to be acquirers in 2014. And this year has already seem the announcement of several large deals, such as Comcast’s $45 billion acquisition of Time Warner Cable, the $13.6B takeover of Jim Beam by Suntory of Japan and Google’s $3.2 billion purchase of Nest Labs.
The U.S M&A market is expected to remain strong, but it’s also expected that conditions in Europe will stabilize. An increase in U.S. companies making acquisitions in Europe is anticipated, once their economy strengthens and revenue projections become more predictable.
On the financing front, the increasing regulatory rules aimed
at banking
institutions are limiting the ability of those institutions to finance deals. However, we are seeing a healthy increase in funding options from numerous alternate sources, including hedge funds, business development companies (BDCs), credit opportunity funds, and the resurgence of collateralized loan obligations (CLOs). Although these alternative sources
of
capital may be slightly more expensive, companies frequently benefit by being able to craft more creative and customized financing solutions.
Q
How optimistic is the M&A market at the moment?
The market seems to be quite optimistic and receptive to M&A. Companies and PE funds should see increased activity in the next 12 to 18 months. With an added focus on all aspects of due diligence and an emphasis on integration, acquirers should be able to achieve successful deals with meaningful returns for shareholders and investors.
Contact Dan Tiemann KPMG LLP
200 E Randolph Drive Chicago, IL 60601-2371
Tel: 312-665-3599 Cell: 312-953-7123
Email: dantiemann@kpmg.com