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EMERGINGS TRENDS IN THE M&A MARKETPLACE: SMALLER COMPANIES STILL WON'T SELL; U.S. INVESTORS SHOW RENEWED INTEREST IN OVERSEAS MARKET

EMERGINGS TRENDS IN THE M&A MARKETPLACE: SMALLER COMPANIES STILL WON'T
 SELL; U.S. INVESTORS SHOW RENEWED INTEREST IN OVERSEAS MARKET
 NEW YORK, Feb. 18 /PRNewswire/ -- Larger and more diversified companies, with an eye toward expanding overseas -- will continue to remain the most active middle market purchasers in 1992, according to a recent KPMG Peat Marwick study that tracks merger and acquisition trends. The study forecasts that there will be some strengthening in deal prices, with 1992 marking a dramatic shift in the sellers' profile.
 KPMG Peat Marwick privately polled nearly 250 top executives of middle market companies in their merger and acquisition plans for 1992, and compared those results with an identical study done last year. "Based on our findings, there is a dramatic shift from the typical M&A deals a few years ago," observed Stephen Blum, head of KPMG's New York Corporate Finance group. "During the 1980s private business owners rushed to realize high marketplace values, but in 1992 we will increasingly see public companies, under intense financial pressure, scramble to sell off less profitable divisions."
 The study determined that the buyers' market will continue into 1992, but there are signs that the depressed market has begun to bottom out. "Owners who recently sold or divested report that negotiating a fair price was less challenging than those who recently purchased -- an indication that there may be some strengthening in deal prices during 1992," said Blum.
 While many companies had been literally shut out of the M&A market because of a lack of financing, some respondents, especially experienced purchasers, expressed strong interest in pursuing investment opportunities. This is yet another sign, says Blum, that the market may be on the upswing. In fact, nearly 40 percent of the respondents reported that their companies either bought, sold or recapitalized during 1991, and 67 percent made an offer to invest or purchase a business. Those most active were larger and more diversified middle market companies, especially those with operations abroad.
 Their targets? Businesses that fit the purchaser's line of business closely and strategically. Among the most attractive industries for investors are manufacturers and technology companies. "Many early-stage technology companies have finally begin to turn a profit, making them attractive for the first time. And manufacturers, more adept at riding out this economic downturn than service companies, comprise more solid targets as well," said Blum.
 With the Persian Gulf War behind us, overseas companies will also attract purchasers. While the earlier KPMG study revealed that many companies were hesitant to acquire abroad, a growing majority of respondents now plan to explore overseas opportunities as a way of establishing or expanding their international identity. "American businesses' renewed interest in overseas investments may be attributed to recession-driven declines in our own market and increasing opportunities in the expanding European markets," said Blum. "Even though political and economic unrest continues in many parts of eastern Europe and the former Soviet Union, the chief executives surveyed seek businesses that have a strong foothold in various global markets."
 Unlikely business partners? Smaller, privately held companies in one line of business, primarily because their owners have chosen to wait rather than sell, riding out the recession in hopes that lower interest rates and a strengthening economy will get them a better price. And since the M&A market mirrors regional and industrial trends, Blum expects little change for an upturn in the real estate and construction industries, and he expects the recession-hit northeast continuing to remain stagnant for most of 1992.
 The confidential responses to KPMG's study were obtained from nearly 2,000 randomly selected top executives. Companies range in size from less than $10 million in sales to more than $250 million. Some 85 percent of the companies are privately held and roughly 65 percent operate on two or fewer lines of business.
 Questions on the results of the study can be directed to Stephen Blum in New York, 212-872-6772; Vanessa Chang in Los Angeles, 213-955- 8817; or to KPMG's National M&A Director Lenz Neuhauser in Chicago, 312- 938-5003.
 Through 135 offices in the United States, KPMG Peat Marwick provides industry-specific professional services to a broad range of businesses. KPMG has more than 76,000 people worldwide and operates in 125 countries. The firm's International Merger & Acquisition Network covers two dozen countries worldwide, with M&A professionals in various U.S. cities, including Chicago, Los Angeles and New York.
 -0- 2/18/92
 /CONTACT: Lisa Meyer of KPMG Peat Marwick, 201-307-7763/ CO: KPMG Peat Marwick ST: New York IN: SU: ECO


KD-TS -- NY004 -- 9904 02/18/92 11:43 EST
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Publication:PR Newswire
Date:Feb 18, 1992
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