On the heels of strong merger and acquisition transaction levels in 2005, 88 percent of Milwaukee-area investment bankers, private equity professionals and corporate executives surveyed in the ACG/Thomson DealMaker’s Survey say the current environment for M&A activity and corporate growth is good or excellent.
According to Thomson Financial, 2005 was the best year for global M&A activity since 2000. Worldwide, $2.70 trillion of mergers and acquisitions were announced. In the United States, $1.13 trillion of deals were announced.
"It has been a good year for many Milwaukee merger and acquisition professionals. Local private equity firms have made and exited good investments, and some are raising their next funds. Milwaukee’s investment bankers have been very active in brokering new deals. It’s a hot and competitive market right now," said James Kettinger, president of the Association for Corporate Growth (ACG) Wisconsin, and Corporate Executive Outsource LLC a management consulting firm.
Area dealmakers see the following sectors experiencing the most merger activity in 2006:
- Manufacturing and distribution (45 percent)
- Consumer products and services (16 percent)
- Business services (10 percent)
- Healthcare and life sciences (10 percent)
- Technology (6 percent)
- Retail (6 percent)
Forty-three percent of area dealmakers expect to be involved in an international cross-border deal in 2006. Geographically, they anticipate these deals will be with:
- Canada (47 percent)
- Western Europe (47 percent)
- China (42 percent)
- India (42 percent)
- Eastern Europe (32 percent)
- Latin America (11 percent)
Survey respondents say the primary objective of mergers and acquisitions today is to:
- Increase revenues and profitability (38 percent)
- Grow market share (31 percent)
- Acquire competitor (9 percent)
- Gain technology (9 percent)
- Gain talent (3 percent)
- Enter new industry (3 percent)
- Diversify geographically (3 percent)
Survey respondents say the sectors that will experience the most organic growth are:
- Healthcare, life sciences (32 percent)
- Manufacturing and distribution (32 percent)
- Technology (19 percent)
- Financial services (6 percent)
- Business services (3 percent)
Executives are also bullish on organic growth of local companies, based upon an improved domestic economy, the ability to charge higher prices and historically low interest rates.
Executives caution, however, that rising interest rates, energy costs), inflation and high cost of labor are potential impediments to further organic growth.
The survey was conducted in December and was completed by 1,977 ACG members and Thomson Financial customers, including 32 Wisconsin dealmakers.
