M&A activities have re-emerged as a leading growth strategy amongst businesses in the USA, according to a survey by KPMG US.
The survey was conducted amongst 738 M&A professionals, investors and advisors in the USA, and found that 82% of the respondents, against 63% in the previous year, anticipated that their companies or clients would initiate at least one acquisition in 2015.
KPMG US leader for transactions & restructuring Dan Tiemann said: "Economic fundamentals that drive M&A are back at pre-crisis levels, with corporations holding large cash reserves, interest rates remaining historically low, consumer confidence improving and the U.S. dollar becoming stronger."
Organic growth often offers limited growth prospects, so buyers are paying a premium for targets that will allow them to realize long-term strategic goals and gain an advantage over the competition, he continued.
The survey revealed that professionals also expect valuations to increase, with only 50%, compared to 77% in the previous year, of participants expecting to pursue deals under $250m and more respondents expecting to do deals valued over $250m.
Participants said they expected to see the highest number of transactions in sectors such as technology, pharmaceutical & biotechnology, financial services and oil & gas.
Moreover, respondents anticipate that the USA will be the most dynamic market for transactions, with 73% of participants saying it will be the most active market for transaction activities in 2015, up from 56% in 2014. This contrasted with a drop in other regions including Western Europe, China and Brazil.
"Many U.S. industries like healthcare, banking and energy are growing in complexity due to disruptive technologies and changing regulations, which drive a high level of transformation," Tiemann said. "Although some regions continue to have slow growth environments, the U.S. capital markets have rebounded since the financial crisis, so we’re seeing acquirers focus on U.S.-based transactions."
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