ONS M&A stats for Q3 2011: Comment from head of corporate finance at Hogan Lovells
06 December 2011
In response to the Q3 M&A figures released by the Office for National Statistics this morning, Andrew Pearson, head of corporate finance at Hogan Lovells, says:
"Despite poor third quarter statistics there is still the potential for an uptick in M&A activity in 2012. Recent Hogan Lovells research among board members and heads of M&A around the world showed that whilst economic uncertainty remains a concern, many corporates have strong balance sheet positions and intend to use it for strategic growth including M&A. In addition to macro-economic issues, the biggest barriers to getting deals done remain concerns over regulation and government or political intervention."
The research referenced is M&A Evolution: Strategies for the New Deal Landscape a joint study with the Financial Times. The culmination of individual interviews with 160 board members of multinationals around the world, this report examines the obstacles impinging deal activity and an examination of strategies that will aid in deal completion. It delivers an in-depth view in a number of areas of interest to dealmaker, including regulation, valuation and funding, and how these have changed post-crisis. The full report can be downloaded at http://www.hoganlovells.com/files/upload/HoganLovells_M&A_Report.pdf
Key findings from the report:
ECONOMIC UNCERTAINTY A CONCERN, BUT NOT IMPACTING M&A STRATEGY
- Only 23% cited the macro economic outlook as one of the major factors affecting the M&A market, with more concern expressed over state regulation and tax (34%) and the availability of equity (28%).
APPETITE FOR M&A REMAINS
- 55% identified growth through outright acquisition as an important element in their growth strategy
- 55% said that the pursuit of organic growth is one of the most important elements of their strategy, with 34% stating is was their most favoured option.
CASH IS KING
- Although availability of finance, particularly equity finance, continues to be an issue 55% said cash on the balance sheet was the most favoured source of funding.