Senior corporate executives predict that merger and acquisition activity in 2006 will surpass last year's performance and remain strong across several industry sectors, according to a new survey from KPMG LLP.
The survey also revealed executives that many acknowledged that their companies face several hurdles in closing those deals, including unrecorded liabilities at the target company and poor pre- and post-deal planning.
More than 60 percent of the 138 corporate senior executives who participated in the survey estimated that at least 25,000 deals will be completed in 2006, while 66 percent expected their own companies to complete at least one cross-border transaction by the close of the year. In 2005, almost 23,000 deals were completed worldwide, and 50 percent of those were cross-border, according to public market reports.
Additionally, 88 percent of those polled expect to complete at least one merger or acquisition this year, and more than 40 percent say their own organizations have plans to sell, spin-off or divest a portion of their businesses over the next 18 months.
"The survey's findings match what we're seeing and hearing in the marketplace," said national services leader of the firm's Transaction Services practice Malcolm Wright, in a statement. "While telecommunications seemed to be the most active sector at the beginning of this year, our survey respondents are telling us that we will be seeing a more balanced M&A marketplace across several industries throughout the rest of this year."
Among other findings of the survey:
- Enhanced competitive positioning was the primary objective of the respondents' companies' recent M&A transactions (76 percent), followed by access to new customers/segments (72 percent), increased scale (66 percent), and access to new product markets (61 percent).
- More than 75 percent of respondents placed the value of all 2006 worldwide M&A deals at least $2 trillion, compared to $1.9 trillion in 2005.
- Only 44 percent of respondents formally assess the success of their completed acquisitions against plans.
