Securing Growth in 2011: The Changing Face of M&A

As the economy begins to recover, European mergers and acquisitions (M&A) enjoy a busy start to the year, fueling forecasts of a bounce back in deal volume terms.

22 April 2011

As the economy begins to recover, European mergers and acquisitions (M&A) enjoy a busy start to the year, fueling forecasts of a bounce back in deal volume terms. To find out what the leading M&A professionals expect to be the predominant deal making trends of 2011, I attended the first Intralinks and mergermarket breakfast event in the new series entitled ‘Securing Growth in 2011: The Changing Face of M&A’.

Held at London’s Andaz Hotel, in the heart of the City, it attracted over 80 attendees, who were keen to learn more about the M&A trends for 2011. The discussion was chaired by Catherine Ford, Managing Editor - Remark, The Mergermarket Group and the panel consisted of Martin Ashcroft, Managing Director, Brunner Mond Group; James Stewart, Partner, ECI Partners LLP; Stephen Wilkinson, Partner, Corporate, Herbert Smith LLP and Philip Whitchelo, VP Product Marketing - M&A, Intralinks.

The panel kicked off with their thoughts on whether the comeback was sustainable. It’s fair to say that the mood was cautiously optimistic. Stephen Wilkinson stated that although 2010 M&A activity was up, the landscape was only just returning to 2008 activity levels and was nowhere near the heights of 2007 just yet. Obviously, deal making was seriously skewed by the financial crisis in 2009 but general indicators such as cash on balance sheets now demonstrates that there are real positives in which M&A can take place. Intralinks’ Philip Whitchelo confirmed this and reported positive news from the recent Intralinks Deal Flow Indicator, an inside view of the state of the global M&A market. Intralinks’ Q4 research showed a 33 percent increase in global M&A deal activity in 2010 up from 2009 and Philip put this down to people taking their time researching strategies to carry out vigilant transactions.

When asked if it was easy to do deals in this environment, Martin Ashcroft stated it is if you have a tangible business. People will believe in your company if you have a strong track record and have a good infrastructure in place to move the business forward. Philip Whitchelo pointed out there is an opportunity for strategic buyers that are cash rich and savvy to pick up a distressed asset and turn the business around, he cited Citigroup buying EMI from Terra Firma as a good example of this. It appears that provided you can see good fundamental business drivers and know how to fix the flaws in the short term then the situation can be rectified. James Stewart was of the same opinion and stated if you’ve done your research, can see which underlying problems can be resolved and you have the right caliber of people within the business then you have the ability to change.

Talk of regions was a hot topic too. When asked which European countries are set to be the most vivacious, the group agreed that there are bullish opportunities in Germany, especially in manufacturing where they are taking advantage of the Euro. When it came to emerging markets, countries within Asia are a force to be reckoned with, Tata being a perfect example in India. Martin Ashcroft discussed how Tata had brought a different mindset to the UK, almost a ‘make it happen’ mentality. The transactions are incredibly quick, British Salt being a prime case in point. However, fear not, most of the panel agreed that Asian buyers were not big threat in Europe and tended to be drawn to the US in the first point of interest.

Overall, the opinions were positive and hopeful. There are certainly signs for success and we are slowly returning to 2007 levels, slowly but surely. Get in touch if you would like to attend the next seminar.

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