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M&A Activity Forecasts for 2013; KPMG

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January 25, 2013

The latest heads up research for 2013 says that M&A activity is expected to remain stable, with a possible slight improvement in the coming year. According to a recent survey conducted by KPMG LLP and SourceMedia, the publisher of Mergers & Acquisitions magazine, the responses of more than 300 M&A professionals at U.S. corporations, PE firms, and investment funds about the expected activity for 2013 revealed that despite  economic challenges, dealmakers are cautiously optimistic and the vast majority of them said that they will be pursuing acquisitions this year.

Selected Findings

  • According to 60 percent of the M&A professionals, companies’ large cash reserves will drive deal activity and 40 percent acknowledged favorable credit terms as a supporting factor.
  • Opportunities in emerging markets will also be a catalyst for deals, said 26 percent of respondents.
  • Primary reasons for making acquisitions varied among the survey population, with 20 percent of respondents reporting that expanding geographic reach would be their primary motivator, while 19 percent cited a quest for profitable operations, followed by 17 percent who anticipated making acquisitions in order to enter a new line of business.

Elsewhere KPMG said that M&A in 2013 will likely be characterized by those companies looking for long-term opportunity.

  • Deals will be smaller and more strategic, as companies fill product gaps and seek new market opportunities.
  • Ongoing European instability may also present opportunities for US buyers with healthy balance sheets. If a resolution is reached around the fiscal cliff and there is more stability in the Eurozone there could see a real spark in M&A activity in 2013. (Image source: KPMG)
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