PwC: Fundamentals are Strong for U.S. Mergers & Acquisitions Activity in 2013

By Rob Starr, Content Manager, Big4.com

According to PwC US, sound deal fundamentals are creating optimism the balance of 2013 will be a stronger year for U.S. mergers and acquisitions (M&A). According to PwC’s U.S. M&A outlook, dealmakers remain vigilant on diligence working through the M&A decision making process, analyzing each outcome and the various impacts on investment and return scenarios. With capital ready to be deployed, along with the increasing availability of financing, PwC expects companies and financial sponsors to use M&A to enhance their growth prospects in the new year.

Corporate cash levels remain steady at $1.1 trillion for the S&P 500, indicating continued opportunity for companies to put their capital to work through M&A.

Martyn Curragh, PwC’s U.S. Deals Leader comments:

“The fundamentals for sustained M&A activity in 2013 are solid, with improving corporate confidence, increasing private equity activity from both a buy and sell side perspective, and relatively healthy debt markets.  There remains strong competition for quality assets as both corporates and private equity continue to seek out deals to fuel their growth and deploy capital,” he says.

Divestitures accounted for 43 percent of total disclosed deal value and 30 percent of deals overall. That’s the highest level since 2005, and should remain a key driver for deal making as companies seek to unlock value in assets.  Those that are currently looking to divest assets have stepped up the sell side diligence process to showcase potential value for quality assets for potential buyers.