54-55-news.qxp 14/12/09 12:44 Page 54
THIS MONTH...
NEWS • ANALYSIS • INSIGHTS
Get ready for the January sales
How long will this recession last? When will M&A funding return to
A
fter two years of nervousness, the
New Year will see a rush of deal
mid-2007 levels?
activity as companies seek to
ditch non-core assets, claims research by
professional services firm Ernst & Young.
Jon Hughes, UK & Ireland managing
partner of Ernst & Young’s transaction
advisory services group, said: ‘In the
coming months, there is likely to be an
increase in M&A activity as companies
dispose of non-core, underperforming or
distressed assets. Those in a position to
1-2 years 36%
buy will have the opportunity to capture
3-5 years 34%
1-2 years 42%
more than 5 years 17%
market share and grow revenues in ways
More than 2 years 28%
6-12 months 9%
6-12 months 25%
that were impossible two years ago.’
Within 6 months 2%
0-6 months 5%
The report, Why Capital Matters,
Never 2%
Source: Ernst & Young Source: Ernst & Young
surveyed 500 senior executives around
the world and found that a third of Hughes said: ‘The winners will avoid years, while 19 per cent believe it may
respondents are likely or highly likely to the temptation of inertia and have the take five years or more.
acquire other companies in the next 12 confidence to use their capital at a time ‘Capital is no longer cheap nor is it
months, while 25 per cent expect to do so when rapid decision-making could make readily available. The tough new realities
in the next six months. the crucial difference.’ will force some executives to seriously
Almost half of respondents (45 per Although there is hope of greater deal consider a strategic review,’ added Hughes.
cent) anticipate an increase in distressed flow, finance remains scarce. Over half (53 Some 70 per cent of respondents expect
assets coming to market, but only 36 per per cent) of respondents think that the recession to persist for more than a year;
cent say that they are ready to act quickly financing conditions will not return to of those, two-fifths believe it will continue
should an opportunity present itself. mid-2007 levels for at least another three for more than two years. ■
54 Mergers & Acquisitions
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