US M&A Activity This Year To Be Weakest In Three Years: Survey

  on

Mergers and acquisitions in the U.S. this year are on pace to be the weakest in three years, Dykema Gossett PLLC, a Detroit-based law firm, said Wednesday in its annual survey of M&A activity.

"In 2007, companies completed more than 12,000 M&A deals globally, with values totaling over $3.5 trillion," the national firm said in a statement. "But those volume and dollar records have since been buried under years of bad news. The current year is on pace to be the slowest for M&A since 2009: through the first three-quarters of 2012, volume is projected around 5,000 deals, and aggregate valuation is currently estimated at $1.5 trillion, significantly less than the 2007 figure."

Not surprisingly, survey respondents expressed many reservations about the year to come: a solid third predicted a negative U.S. economy, and a fifth anticipated a weaker M&A market.

However, "there are glimmers that may point to an eventual return to more robust deal-making markets," the law firm said. 

More than half of the respondents expected to be involved in at least one transaction in the coming year. Also, more respondents than in the previous year's survey predicted a strengthening of the U.S. economy and a strong U.S. M&A market.  

In written comments, respondents predicted that once the shocks currently buffeting the economy are dealt with, the economy and the attendant M&A market may be "spring-loaded" for more activity, the law firm said.

Among the survey's other findings were the following:

-- Capital is plentiful. Many buyers say they are keeping powder dry, waiting for the right targets.

 -- Most respondents were rooting for the losing side in the November election. Many who responded after President Obama’s re-election expressed gloominess at the result and the resulting effect on the markets. The silver lining may be that political risk and overall uncertainty will dissipate, positively affecting the economic outlook and the U.S. M&A market. -- Almost all respondents agreed that we are entering a higher-tax environment. But fewer deal makers than expected said they are trying to close deals before tax rates change in January.  

Join the Discussion