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

By Rob Starr, Content Manager, Big4.com

Ongoing access to capital and financing, strengthened balance sheets and divestiture activity will continue to fuel deal activity in 2013, according to PwC US.

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. “We’ve been supporting a range of buyers and sellers across a broad spectrum of industries, helping them raise capital through high yield offerings and providing diligence and valuation analyses for potential deals.  Dealmakers have been very cautious and disciplined in evaluating transactions. They are placing a premium on a thorough analysis of potential risks and exposures and are seeking to ensure there is broad functional support to successfully manage deal execution and reduce the risk of value leakage.”

In light of available cash and growth strategies, a desire to get deals done has heightened the competition among corporate and private equity buyers.  According to PwC, more bidders are taking a longer look at a given target over the past 12 months.

Divestitures accounted for 43 percent of total disclosed deal value and 30 percent of deals overall, the highest level since 2005, and should remain a key driver for deal making in the year ahead 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.