M&A Deal Outlook for 2010 is 78% Positive

Ahead of Tulane University’s annual Corporate Law Institute conference on Thursday, the Brunswick Group released a survey on Mergers & Acquisitions Activity in 2010, polling a leading group of investment bankers and transaction attorneys.

The same survey last year showed that 69% of respondents believed it would take 5 years to see a recovery in M&A activity. The survey released this week was much more positive – 78% of respondents predict that M&A activity will increase through 2010 from already higher levels seen in Q1 2010.

Of note was that 0% of respondents predicted a drop in M&A activity this year, with the remaining 22% predicting M&A activity would remain at Q1 2010 levels through the rest of the year.

Foreign buyers less active

In a reversal of the boom times in recent years, only 14% of respondents believe that foreign buyers will lead deal activity in the US. The overwhelming majority expect 2010 to be a strong year for domestic mergers and acquisitions.

Industry sectors

Top industries for increasing M&A activity and consolidation are: Healthcare (24%); Energy (18%); Financial Services (17%); and Tech and Telecommunications (13%).

Oklahoma

From an Oklahoma perspective, this survey reflects the same trend that we are seeing in our office. Many business owners in this region that had been sitting on the sidelines for the last couple of years are now planning and preparing for an M&A sale process with a target date of Fall 2010 as the ideal time to close their deal. This should make for another busy year.

Why do we care about M&A Activity if we’re not buying or selling?

Increasing M&A activity is a positive indicator of the outlook for business activity and business performance. It also shows that business leaders are in growth mode and see now as the right time to spend money and pick up market share – they would only do so if they were confident about business conditions in the future. The survey results showed CEO/Board confidence as the biggest driver to increased M&A activity in 2010.

And in certain circumstances, it shows that business lending is becoming more freely available. Without lenders participating in an acquisition, very few deals would ever get done. What is positive for M&A transactions is also positive for business lending in general – if you’re considering any kind of capital refinancing or restructuring in 2010.

The survey is available to download through the New York Times’ Deal Book section.