ACG-Thomson Reuters Year-End 2008 DealMakers Survey Reveals Obstacles and Opportunities for M&A and Private Equity Investing in First Half of 2009.Ohio Dealmakers' Confidence Reaches All-Time Low CLEVELAND -- The latest twice-yearly survey of middle market merger professionals by the Association for Corporate Growth (ACG ACG American College of Gastroenterology; angiocardiography; apexcardiogram. AcG accelerator globulin (coagulation factor V). AcG accelerator globulin (clotting factor V). ) and Thomson Reuters reveals the most negative outlook in the history of the survey, with 90% of Ohio dealmakers saying the current M&A environment is fair or poor. The percentage of those who say the current deal environment is good or excellent has fallen to 10% in December 2008, from a high of 95% in June 2007. The percentage has steadily dropped to 70% in December 2007, and to 41% in June 2008. Most Ohio dealmakers do not see it getting better any time soon. Looking out six months, dealmakers expect the M&A environment to be: * Worse (28%) * The same (33%) * Better (19%). The middle market investment bankers, private equity professionals, corporate development officers, lawyers, accountants, and business consultants polled say the greatest obstacle to M&A activity is: * Credit crunch Credit Crunch An economic condition whereby investment capital is difficult to obtain. Banks and investors become weary of lending funds to corporations thereby driving up the price of debt products for borrowers. (53%) * Weak economy (18%) * Sellers unwilling to sell at multiples offered (17%). The latest data from Thomson Reuters supports the survey findings. The volume of all worldwide mergers and acquisitions totaled $2.4 trillion in announced deals during the first three quarters of 2008, a decrease of 28% over the record-breaking first three quarters of 2007, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Thomson Reuters. Of this total, M&A deals in the mid-market, defined by Thomson Reuters as transactions under $500 million, fared better. Less reliant on the global credit markets, they declined only 16%, with a total value of $569.6 billion. As for which sectors will experience the most M&A activity in the next six months, dealmakers are most bullish on: * Financial services (33%) * Healthcare/life sciences (22%) * Manufacturing and distribution (17%). "While the large buyout deals all but shut down more than a year ago, merger and acquisition activity in the middle market was more resilient until recently, both locally and nationally," said Tom Freeman, President of ACG Cleveland and a partner in Grant Thornton's M&A Transaction Advisory Services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal Group. "Middle market deals were getting done because they were not as dependent on securing debt. But as credit has dried up, we have seen fewer and fewer private equity transactions. There were a handful in Northeast Ohio in October, but of the seven local deals closed or announced in November, none involved a private equity group." Private Equity Firms' Greatest Threats, Best Strategies Among survey respondents, private equity professionals say the sectors with the greatest opportunities for buyout investments over the next six months are: * Manufacturing and distribution (26%) * Financial services (18%) * Healthcare/life sciences (16%) * Business services (16%). Private equity professionals believe today's greatest threats to their business are: * Credit crunch (73%) * Overall economy (61%) * Lack of exit opportunities (44%). More private equity professionals say they are modifying their investment strategy (41%), versus 0% in June 2008. They say the best strategies for success in the current environment are: * Focus on portfolio companies (45%) * Focus more on add-on acquisitions than platform acquisitions (42%) * Cut costs at portfolio companies (42%). The lack of acquisition financing has affected 100% of private equity professionals, and 57% expect to put more equity into their deals in the next six months. They are primarily securing debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay from: * Mezzanine lenders (65%) * Commercial banks (62%) * Seller debt (58%). Six months from now, private equity professionals expect the debt markets will be: * Better (57%) * The same (28%) * Worse (15%). Many private equity respondents say they have not adopted fair value accounting standards consistent with FAS 157. * Have adopted (32%) * Plan to adopt (35%) * Do not plan to adopt in near term (32%) Many private equity firms plan to mark down their portfolio company values in their next quarterly statements. * Plan to mark down (48%) * Plan to hold steady (48%) * Plan to mark up (5%) Survey Methodology This survey, conducted in November 2008, was completed by 970 ACG members and Thomson Reuters customers. Respondents were comprised of private equity, venture capital and buyout firm members (19%); investment bankers, intermediaries, brokers (26%); lenders, finance providers (12%); corporate professionals, entrepreneurs (13%); hedge funds (1%); Limited Partners (2%); and service providers, such as lawyers, workout specialists, accountants and consultants (28%). The majority of respondents were from the United States (926), where 42 states were represented. Internationally, executives from 11 countries completed the survey. For a copy of the full survey results, please go to: www.acg.org. The mid-year 2009 survey results will be released at ACG InterGrowth in·ter·growth n. 1. The growing of one thing with or into another. 2. Mineralogy The growing together of crystals from two or more minerals. at the Wynn Las Vegas, May 12-14, 2009 (www.acg.org/Conferences/InterGrowth). News releases were created for states with 30 or more responses. About ACG Founded in 1954, the Association for Corporate Growth (ACG) is the global community for M&A and corporate growth professionals, helping connect capital with opportunity. ACG provides its members with the research, tools and networking opportunities to grow their businesses and themselves professionally. ACG has grown to more than 12,000 members from corporations, private equity, finance, and professional service firms representing Fortune 1000, FTSE FTSE A company that specializes in index calculation. Although not part of a stock exchange, co-owners include the London Stock Exchange and the Financial Times. Notes: The FTSE is similar to Standard & Poor's in the United States. 100 and mid-market companies in 53 chapters in North America and Europe. For more information, please visit www.ACG.org. Europe. ACG Cleveland has more than 430 members and is now the fifth largest ACG chapter. For more information about ACG Cleveland, please visit www.acg.org/cleveland. About Thomson Reuters Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. Thomson Reuters combines industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, scientific, healthcare, and media markets, powered by the world's most trusted news organization. With headquarters in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and major operations in London and Eagan, Minnesota, Thomson Reuters employs more than 50,000 people in 93 countries. Thomson Reuters shares are listed on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. 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A technical analysis indicator calculated by taking the advances-to-declines spread and dividing that by the volume of advances to declines. Notes: If the value of this is less than 1, then it is considered to be a very bullish indicator ). For more information, go to www.thomsonreuters.com. |
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