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Stars Align and 2013 Proves to be Hottest U.S. IPO Market Since 2004 — Momentum Continues in 2014

— PE-backed IPOs dominate with most active year since 2007

— 2013: year of the healthcare IPO

— “Blurring” of technology and other industries lead to interesting implications for IPOs

NEW YORK, Dec. 10, 2013, The market environment delivered all of the right signals in 2013, presenting a long-awaited window of opportunity for IPOs.  With a calmer economic climate, companies looking to go public were seemingly unphased by the 4th quarter government shutdown. This, combined with low volatility and a huge backlog of PE-backed IPOs seeking an exit, brought IPOs back with a bang: 222 IPOs in total will go effective in 2013 raising proceeds of $59.7 billion[1], with 76 deals in the public pipeline at the end of Q4. Activity and momentum in 2014 are only expected to continue.

“Investors have had the opportunity to engage with a variety of companies in the pipeline and their appetite for risk has returned,” said Jackie Kelley, for the global EY organization. “Unlike five years ago when, for the most part, tech companies were the only ones getting out, we now see pockets of activity in multiple sectors. This was a standout year for healthcare, for example. VC-backed companies came back to market and PE-backed IPOs will continue to push into 2014.”

Year over year, the number of IPOs increased 67%, from 133 in 2012 to 222 in 2013.  Proceeds increased 28%. Quarter over quarter, there were 67 IPOs in Q4 2013 compared with 33 in Q4 2012, an increase of 103%, with proceeds up 171%; additionally, the number of IPOs in Q4 increased by 12%, and proceeds increased by 96% when compared with Q3 2013.

IPOs from around the world
The US continues to attract IPOs from around the world as companies seek to capitalize on the momentum of the US capital markets. For example, 36 out of 222 US IPOs were cross-border IPOs, ie 16% of US exchanges IPOs by deal number and 11% by capital raised (US$6.7b raised) were from foreign private issuers. This compares to 9% of US IPOs by deal number and 12% by capital raised in 2012.

The IPO market surge in the US, positive investor sentiment for this asset class and appetite for global investment makes the US attractive and much more competitive than their domestic markets.

PE-backed IPOs Dominate:
PE activity provided a key source of IPO-related exits this year. As an indicator of the volume, in 2007, the peak year for PE-backed IPOs, there were 94 deals with proceeds of $20.3 billion. In 2013, by contrast, of the 222 IPOs, 94 were PE-backed and valued at $32.8 billion. An impressive 42% of all US IPOs were from PE backed companies.

Large offerings in the oil and gas sector drove the trend, collectively raising $5.8 billion. And despite relatively robust levels of exit activity over the last two years, there remains a significant backlog of PE exits that will continue to spur IPO activity into 2014. Multiple PE firms raised upwards of $10 billion in 2013, a sign of optimism for future deal making. While the increased interest in IPOs is a positive development for PE exits, an uptick in M&A will ultimately be required to fully liquidate the current PE portfolio.

Healthcare on Top:
After being sidelined for almost 10 years, the healthcare sector came back to market in a big way in 2013. Most of the healthcare companies in the pipeline were smaller IPOs that really benefitted from the JOBS Act, legislation put in place over a year ago easing the IPO path for companies with post-IPO market cap size of less than $1 billion.

However, investors, chasing healthcare IPOs for their great performance and the substantive products they are developing, may not stick around if market volatility heats up again. Other sectors rounding out the top five include: Technology, Energy and Power, Real Estate and Financial Services.

Emerging IPO Companies Will Blur Distinctions Between Sectors:
The growing convergence between technology companies and other industries is creating new opportunities for companies to add shareholder value via the capital markets. “We expect to see more blurring of tech and other industries — including consumer products, media, real estate, financial services,” said Kelley. “Companies in these “blurred” industries, meaning they can cross over into two different sectors, are coming to market. They will have a choice under which sector to list and it’s likely that valuation will be a key driver.”

As more consumers utilize mobile and cloud technology to get what they want and faster, emerging IPO companies coming to market will be more focused on creating direct touch points with consumers, eliminating  the middle man to bring suppliers and customers closer together, according to Kelley. She suggests we can expect to see more companies offering personalized products or a more personal user experience, such as making personal and business transactions faster, simpler and more secure; building customer trust; and delivering quality content and insight for users.

2014 Looking Ahead:
As 2014 rides the performance wave of 2013, the future looks bright for the IPO pipeline. Investors will look to the IPO market to drive portfolio growth. Inbound interest has piqued, with companies in Europe, the Middle East and South America looking to list on the U.S. markets –driven by the high valuations companies have garnered and good post-IPO performances over the past year.

“IPOs in 2014 will be a combination of household names, as well as disruptive, innovative companies. The backlog of PE-backed IPOs will continue to push into 2014 and companies blurred by sector convergence will drive market activity, all making for another exciting year,” concluded Kelley.

Notes to editors
All Data sourced from Dealogic.

About EY’s IPO offerings

EY firms are leaders in helping to take companies public worldwide. With decades of experience our global network is dedicated to serving market leaders and helping businesses evaluate the pros and cons of an IPO. We demystify the process by offering IPO readiness assessments, IPO preparation, project management and execution services, all of which help prepare you for life in the public spotlight. Our EY Global IPO Center of Excellence is a virtual hub which provides access to our IPO knowledge, tools, thought leadership and contacts from around the world in one easy-to-use source.

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

[1] Data are completed IPOs through December 5, 2013 and projected IPOs in December, 2013

 

SOURCE:

EY

http://www.ey.com

 

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Noticeable Drop in Credit Risk Levels for Corporates; though Some Companies Still a Concern, says New S&P Capital IQ Report

Credit Market Pulse leverages S&P Capital IQ Data and Analytics to enhance Financial Professionals’ Understanding of Credit Risk

NEW YORK and LONDON, Nov. 20, 2013, In a new, bi-monthly research publication aimed at credit risk professionals and launched today, S&P Capital IQ confirms that risk levels as a whole have dropped off in the last year, although certain industries and regions remain higher risk areas.  These and other findings may be found in Credit Market Pulse, a six-page research note designed for credit risk analysts, investment managers and others concerned with credit exposures, seeking deeper understanding of the risks and opportunities underlying their investment or lending decisions, or looking to compare how their portfolios perform against the market.  To view a copy of Credit Market Pulse’s inaugural issue, please click here or visit www.spcapitaliq-credit.com/credit-market-pulse-november-2013.

Each issue of Credit Market Pulse offers a broad overview of the health and credit trends within the global capital markets, leveraging the extensive analytical intelligence and depth of S&P Capital IQ. The current issue, for example, also illustrates how several companies and industries with significant risk profiles are topping the charts for highest probability of default (PD) and credit deteriorations.

“Industry and country benchmarks for credit risk are sought after by the entire credit risk community and everybody knows that existing credit indices, that are based on CDS data, do not reflect the whole market sentiment and are often just the tip of the iceberg,” says Marcel Heinrichs, Director, Market Development, S&P Capital IQ. “We hope Credit Market Pulse, which leverages credit risk indicators from 30 times more companies than exist in the liquid CDS market, will become an important new benchmark for credit risk officers, investment managers, the debt capital market community, corporations and others looking to bring additional credit risk metrics and forecasting capabilities into their financial decision making.”

Thomas Yagel, Director, Credit Market Development, S&P Capital IQ adds, “S&P Capital IQ is uniquely suited to produce in-depth credit analysis that looks at global and local trends. With our world-renowned S&P Capital IQ fundamentals data, cutting-edge analytical risk models and in-depth sources for news, research and key developments we are especially able to meet this requirement.”

At the core of Credit Market Pulse is S&P Capital IQ’s proprietary probability of default (PD) model, ‘Market Signals’, a unique analytical model which provides daily changing forward looking PDs of publicly listed companies based on a cutting-edge econometric framework.  In addition, this model generates more than 37,000 company-specific PDs every day, covering more than 99% of global market capitalization across developed economies, frontier and emerging markets.

The first issue of Credit Market Pulse has three sections, providing different views of credit risk. These include the quarterly evolution of the median PD of companies aggregated in different geographical regions; monthly evolution of the credit risk for constituents of the S&P 500 equity index and its various industry sub-indices and, finally, PD tables of individual companies that merit special attention.  Customized searches similar to those presented in the report can be run for interested media using the data in Credit Market Pulse.

To subscribe to Credit Market Pulse, visit www.spcapitaliq-credit.com/creditmarketpulse.

Media Contacts:

Michael Privitera
S&P Capital IQ Communications
+1 212-438-6679
michael.privitera@spcapitaliq.com

Eleanor Childs
S&P Capital IQ Communications
+44 (0)20 7176 6754
eleanor.childs@spcapitaliq.com

About S&P Capital IQ

S&P Capital IQ, a part of McGraw Hill Financial (NYSE: MHFI), is a leading provider of multi-asset class and real time data, research and analytics to institutional investors, investment and commercial banks, investment advisors and wealth managers, corporations and universities  around the world. S&P Capital IQ provides a broad suite of capabilities designed to help track performance, generate alpha, and identify new trading and investment ideas, and perform risk analysis and mitigation strategies. Through leading desktop solutions such as the S&P Capital IQ, Global Credit Portal and MarketScope Advisor desktops; enterprise solutions such as S&P Capital IQ Valuations; and research offerings, including Leveraged Commentary & Data, Global Markets Intelligence, and company and funds research, S&P Capital IQ sharpens financial intelligence into the wisdom today’s investors need. For more information visit: www.spcapitaliq.com.

S&P Capital IQ, as well as its affiliates, directors, officers shareholders, employees or agents (S&P Capital IQ) are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for any results obtained from the use of the Content described herein, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P Capital IQ and its affiliates DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

SOURCE:

S&P Capital IQ

 

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France Tops U.S. in Placing Women on Corporate Boards

WASHINGTON, Feb. 22, 2013, France has overtaken the United States’ lead role as the country with the highest percentage of women directors among the 200 largest companies in the world, according to the latest Corporate Women Directors International study of women directors. Propelled by quota legislation passed in 2010, a quarter of directors (25.1%) in France are now women, while the percentage in the U.S. peaked at 20.9%.

“France has raised the bar for other countries interested in opening up corporate board rooms to women,” said Irene Natividad , chair of the Washington-based international research group CWDI. “The dramatic increase in the number of women now serving on the boards of French companies shows that it is possible to do this at a quicker pace as long as there’s a plan to do so.” Among the Fortune Global 200 companies, the average percentage of women directors came to only 15%.

An impetus behind the increases in France and other European countries is through government quotas, which require 30-40% of board seats to be allocated for women. Norway, which paved the way by successfully reaching its 40% mandate for women on boards in 2008, has now been joined by Spain, the Netherlands, Iceland, Italy, and Belgium. Outside of Europe, Malaysia has a quota which will be implemented by 2016. With10 other countries with quotas for women on the boards of government-owned companies, there are now 18 countries using this strategy, with the United Arab Emirates the latest to require companies to have women on their boards.

The other propellant that led to more women board directors this year is the inclusion of gender or board diversity in the corporate governance code in several European countries – an initiative that has now spilled over to other continents. A very popular strategy for countries wanting to avoid quotas, there are now 17 countries who have adopted this initiative. Finland led this drive resulting in 22% of board seats now held by women, without a quota in place.

Among the Fortune Global 200 companies covered in the 2013 CWDI Report, those companies based in countries with quotas had a higher percentage of women directors (18.9%) than the average representation of women in peer companies at 15%. The three countries with the largest increases in the percentage of women directors since 2004, when CWDI first tracked women directors in the Fortune Global 200, all have quota laws – France (7.2% to 25.1%), Spain (1.9% to 12.7%), and Italy (1.8% to 9.3%).

Similarly, those companies which made it to the Fortune listing, which are based in countries with gender diversity recommendations for corporate boards also had a higher percentage of women directors at 19.9% than those companies in countries without such a directive in their corporate governance code.

“Quotas work,” said Natividad. “Inserting gender diversity into corporate governance codes works. What doesn’t work is assuming that women will rise to board seats ‘naturally’, and therefore do nothing.” The three countries with the lowest percentage increases in women-held board seats are the United States, China and Japan and all three countries combined have the largest cluster of companies among the 200 largest in the world at 104. None of these countries have concerted proactive strategies to improve the numbers of women directors in their respective countries. Should they do so, the percentage of women directors among the Fortune listing would rise significantly.

CWDI’s Top Ten list of best performing companies is dominated by US and French companies and has mushroomed to 26 companies (due to ties), again due to measures undertaken by countries to speed up the number of women directors. A U.S. company, Procter and Gamble leads the Top Ten with 45% of its Board made up of women.

About CWDI:

Corporate Women Directors International (CWDI) promotes the increased participation of women in corporate boards globally, fosters national and international networks to link women directors, and seeks to hone directors’ skills in corporate governance. To provide baseline information from which women’s progress on corporate boards can be measured, CWDI has conducted research internationally since 1996 to identify women corporate board members in Australia, Canada, Japan, South Africa, Spain, and the United States, as well as regional and global reports covering top companies and their record on board diversity. CWDI has also issued industry-specific studies resulting in 21 reports in 17 years.

In addition, CWDI has held roundtables on corporate governance in several cities globally for women directors and executives. The most recent brought together business and government leaders convened with the World Bank in Washington, DC, to share board diversity initiatives from several countries. For more information about CWDI or its publications, please contact Corporate Women Directors’ Washington, D.C. headquarters at cwdi@globewomen.com.

SOURCE: Corporate Women Directors International

 

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Survey of Global Public Companies Finds Investor Relations Professionals Ready to Engage Investors with Mobile Technologies

IROs from Leading Companies Know Investors Want Mobile Communications; IROs Still See Barriers to Executing Mobile IR Strategies and Publishing Apps

NEW YORK, Feb. 19, 2013, Investor Relations professionals at public companies plan to embrace mobile technologies and incorporate them into their communications strategies this year, according to a survey conducted by theIRapp™, the investor relations app building technology platform that allows public companies to optimize their IR content for iPhone, iPad and Android mobile devices.

As part of theIRapp’s™ work to help the IR industry understand and embrace new technology, the company surveyed more than 100 IROs during the course of January, 2013. theIRapp gathered opinions and thoughts on how these professionals view the importance of mobile technology to their work communicating with investors, and how they plan to incorporate it this year and in the future. The IR executives offering insight covered small, medium and large market capitalization companies across diverse industries. Notable names of companies responding to the survey include McDonald’s, Urban Outfitters, and Hewlett Packard.

Survey results showed:

  • 88% of IROs recognize the importance of mobile to their work as communications professionals and believe that public companies need to develop a mobile IR strategy in the coming year(s);
  • 57% of IROs believe investors now require faster access to IR content via mobile devices as compared to traditional sources.

Notwithstanding the above findings, more than 78% of companies currently do not use mobile devices for their IR communications.

With respect to their views on the landscape of mobile IR, the IROs surveyed said the following:

  • 91% believe the same amount or more companies will consider publishing an investor relations app this year;
  • 41% do not want to be first in their industry; they want to see other companies publish an IR app;
  • 21% want to follow the leaders; they want to see larger companies publish IR apps first;
  • 38% think investors are still tied to their desktops; they want to see deeper adoption of mobile devices across their investor base before embarking on a mobile strategy;
  • 67% think the SEC will react in the near future to the use of mobile technologies/apps for investor communications and for Reg FD disclosure purposes ;
  • 35% have not implemented a mobile strategy because of budgetary constraints.

Qualitatively, IROs surveyed believe that more companies will launch IR apps and mobile strategies in 2013:

  • Because they want to enhance their communications with investors and stay current with technological advances;
  • Because they are looking for ways to be more transparent;
  • When more prevalent and reliable wireless connectivity exists;
  • To expand their investor base, particularly with individual/retail investors.

Commenting on the survey, Jeff Corbin, co-founder of theIRapp, said, “The use of mobile technology and IR apps in communications is a new and emerging category. Companies are only beginning to recognize the power of mobile to shareholder engagement and communications as can be seen by the fact that today only approximately 100 native IR apps can be found in Apple’s App Store and the Google Play Market. While these tend to belong to larger corporations like Walmart, Marathon Oil and Campbell’s Soup, companies with smaller market capitalizations are also starting to embrace IR apps as a way to communicate with their investors who increasingly are on the go and not tied to their office desktop.”

He continued, “We now find ourselves at a very exciting time in the IR industry. There is a complete paradigm shift underway with respect to how people communicate with each other. To the extent mobile technologies offer companies the ability to push information and engage directly with investors via their very personal mobile device, the IR industry must consider and rethink how investors are now consuming information.”

“In or around 2000, the IR section of the corporate website was a nice to have and was unregulated by the SEC. Now it is an accepted means through which to communicate and every company must have one. Given what we have seen over the past couple of years with the proliferation of mobile, and as was confirmed by theIRapp’s survey, no one can question that mobile devices and apps are here to stay and just as the IR section of the corporate website is now a must have, so too will be the case with IR apps.”

For more information on the survey, please visit www.theirapp.com or contact theIRapp at info@theIRapp.com or 212-896-1255 Media contact Joe McGurk jmcgurk@kcsa.com/ 212.896.1231.

About theIRapp™

theIRapp™ (www.theIRapp.com) is a turnkey mobile investor relations application building solution available to all publicly traded companies listed on all global stock exchanges. It enables a company’s investor relations information to be downloaded via Apple’s App Store on the iPhone and iPad as well as Google Play for Android devices. theIRapp is a simple way for investors to engage with critical company and stock information. theIRapp delivers easy sharing of content with colleagues and friends as a next generation IR solution for establishing transparency, building shareholder loyalty, and expanding an investor following.

By providing a company’s ticker symbol and logo, a public company can have its own customized app available as a free download for millions of investors in less than three weeks. Through theIRapp, retail and institutional investors have access to automated, real-time stock price information (via live data feeds), press releases, SEC filings, analyst coverage, corporate documents (fact sheets, presentations, etc.), videos, audiocast conference calls, upcoming events and other custom company information.

SOURCE:

theIRapp

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McDonald’s Global Comparable Sales Decrease 1.9% In January

OAK BROOK, Ill., Feb. 8, 2013, McDonald’s Corporation today announced that global comparable sales decreased 1.9% in January. Performance by segment was as follows:

  • U.S. up 0.9%
  • Europe down 2.1%
  • Asia/Pacific, Middle East and Africa (APMEA) down 9.5%

“McDonald’s is focused on satisfying the needs of each and every customer visiting our restaurants in search of great-tasting food and beverages, outstanding service and everyday value,” said McDonald’s President and Chief Executive Officer Don Thompson. “While January’s results reflect today’s challenging environment and difficult prior year comparisons, I am confident that our unwavering commitment to delivering an exceptional restaurant experience will enhance our brand’s relevance and drive long-term results.”

January comparable sales increased 0.9% in the U.S. driven by a balanced offering of premium, core and compelling value options, including the addition of the new Grilled Onion Cheddar burger to the Dollar Menu. Results for the month also benefited from convenience and restaurant modernization strategies designed to provide customers with a better overall experience.

In Europe, comparable sales decreased 2.1% as positive results in the U.K. and Russia were offset by performance in Germany, France and other markets. Throughout Europe, McDonald’s remains focused on appealing to a broad range of customer preferences with seasonal food events and enhanced value and breakfast offerings along with extended operating hours.

In APMEA, January’s comparable sales decreased 9.5% due to ongoing weakness in Japan and negative results in China due primarily to the shift in timing of Chinese New Year and, to a lesser extent, the residual effects of consumer sensitivity around the recent supply chain issue in the chicken industry, which more than offset positive results in Australia.

Systemwide sales for the month increased 0.3%, or 0.7% in constant currencies. For the month of February, comparable sales will be negatively impacted by approximately 3 percentage points as prior year results included one extra day due to leap year.

Percent   Increase/(Decrease)

Comparable

Systemwide   Sales

Sales

As

Constant

Month ended January   31,

2013

2012

Reported

Currency

McDonald’s Corporation

(1.9)

6.7

0.3

0.7

Major Segments:

U.S.

0.9

7.8

1.9

1.9

Europe

(2.1)

4.0

3.8

0.6

APMEA

(9.5)

7.3

(8.6)

(5.1)

Definitions

  • Comparable sales represent sales at all restaurants, whether operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction and natural disasters. Comparable sales exclude the impact of currency translation. Comparable sales are driven by changes in guest counts and average check, which is affected by changes in pricing and product mix. Management reviews the increase or decrease in comparable sales compared with the same period in the prior year to assess business trends.
  • The number of weekdays and weekend days can impact our reported comparable sales. In January 2013, this calendar shift/trading day adjustment consisted of one less Sunday and Monday, and one more Wednesday and Thursday compared with January 2012. The resulting adjustment varied by area of the world, ranging from approximately -0.9% to 0.8%. In addition, the timing of holidays can impact comparable sales.
  • Information in constant currency is calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results excluding the effect of foreign currency translation and bases incentive compensation plans on these results because they believe this better represents the Company’s underlying business trends.
  • Systemwide sales include sales at all restaurants, whether operated by the Company or by franchisees. While franchised sales are not recorded as revenues by the Company, management believes the information is important in understanding the Company’s financial performance because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base.

Upcoming Communications

The Company plans to release February 2013 sales on March 8, 2013.

McDonald’s is the world’s leading global foodservice retailer with more than 34,000 locations serving more than 69 million customers in 119 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local men and women.

Forward-Looking Statements

This release contains certain forward-looking statements, which reflect management’s expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in the Company’s filings with the Securities and Exchange Commission, such as its annual and quarterly reports and current reports on Form 8-K.

SOURCE:

McDonald’s Corporation

http://www.mcdonalds.com

 

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KPMG Survey: Mergers And Acquisitions Projected To Be On The Rise In 2013

Survey Results Show Expected Focus on Middle-market Deals in 2013

NEW YORK, Jan. 22, 2013, Merger and acquisition (M&A) activity is expected to increase in 2013, according to a survey conducted by KPMG LLP, the U.S. audit, tax and advisory firm, and the Research practice unit of SourceMedia, the publisher of Mergers & Acquisitions. The survey of more than 300 M&A professionals in the U.S. found that 76 percent of respondents anticipate that their company will make at least one acquisition in 2013.

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.

“Although there is still plenty of uncertainty in the markets, we will likely see M&A activity pick up as the year progresses,” said Dan Tiemann , Americas lead for KPMG’s Transactions & Restructuring practice. “Financing conditions continue to be positive. Many companies are holding large amounts of cash and the U.S. debt markets remain open.” Tiemann also added, “As part of efforts to pursue their growth agendas, companies will look to execute transactions that align with their business priorities and strategic road map.”

Deal size is expected to remain on the smaller side, similar to 2012. Seventy-nine percent of the survey population expects their deals to be valued at $250 million or less, and 12 percent foresee deals valued between $250 million and $500 million. Only two percent expect to engage in deals valued between $1 billion and $5 billion.

The survey results are consistent with marketplace trends, said Phil Isom , U.S. leader for KPMG’s Corporate Finance and Restructuring practice. “Middle-market deals continue to dominate. They are easier to finance and to justify to shareholders in what is still a somewhat uncertain economy,” he said.

The survey also examined respondents’ projections for M&A among specific industries, which indicate possible increased activity in the technology sector (39 percent), healthcare and pharmaceuticals sector (35 percent), and energy sector (31 percent). When asked which region would experience the most deals in 2013, 73 percent of respondents cited North America. Western Europe and China garnered 28 percent and 27 percent of responses, respectively.

Marc Moyers , KPMG’s national sector leader for Private Equity, agrees that technology and healthcare will continue to be attractive, especially for private equity investors. “The constantly evolving world of technology and investment opportunities that arise as we get more clarity around Obamacare will create attractive opportunities in those sectors,” he said. “Private equity investors will continue to seek out U.S. companies with significant upside potential, as well as emerging markets with strong growth opportunities.”

Additionally, nearly two-thirds of the M&A professionals noted that deal activity would likely be most inhibited by recessionary fears and a slow growth environment. Thirty-one percent would credit sluggish deal activity to uncertainty surrounding the tax code, whereas concerns about Europe were cited by 23 percent and regulatory considerations by 20 percent.

Sixty-nine percent of survey respondents said they considered tax implications at the outset on a deal. “Every transaction — merger, acquisition, or restructuring — has tax implications,” according to Lisa Madden , U.S. leader for KPMG’s M&A Tax practice. “How the business is transferred, what jurisdictions the business operates in, and where the acquisition financing is placed within the enterprise can all have a major impact on the way a deal is structured and, perhaps most important, on its final value for stakeholders.”

Integration challenges should also be analyzed at the inception of a deal. Survey results concluded that the most significant integration concerns are cultural issues (38 percent), human capital issues (36 percent), and operational and rationalization issues (34 percent).

With the prospect of significant synergy opportunities and the impetus to pay a higher price for assets to support long-term economic and strategic goals, corporate buyers will have an advantage over private equity buyers in the current deal environment, said 44 percent of the survey population. Thirty percent of respondents thought private equity buyers would have the advantage, while 17 percent responded that neither party would have the advantage.

About the Survey

KPMG LLP engaged the Research practice unit of SourceMedia, the publisher of Mergers & Acquisitions, to survey 305 merger and acquisition professionals from U.S. corporations, private equity firms and investment funds in November 2012. A complete copy of the report is available on the KPMG U.S. website.

KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International.”) KPMG International’s member firms have 145,000 people, including more than 8,000 partners, in 152 countries.

Contact:

Jamie Bredehoft

KPMG LLP

(201) 505-6074

jbredehoft@kpmg.com

SOURCE: KPMG LLP

 

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