KPMG predicts a strong US M&A market
because of lower corporate debt and higher profits.
The Global M&A Predictor report
found an overall downward trend in net debt/EBITDA ratios as US
companies analysed were found to be deleveraging faster than their
global counterparts, with net debt projected to fall 34% by June
2012 compared to 19% globally.
“Companies have paid down their debts and have
more cash on hand, which should provide them with more capacity to
borrow and fund future acquisitions. As a result, corporate buyers
may now have the upper hand when negotiating attractive
acquisition,” KPMG US leader of corporate finance Phil Isom
said.
The report also found US companies are
expected to grow at a faster rate in net profits, with projected
increases of 17% in comparison to an anticipated 15% increase in
global net profits.
US price/earnings ratios remain at a premium
to the global averages; 12.2 in the US in and 11.2 globally. Isom
said this signals improved investor confidence in the US market and
also this indicates that M&A activity, particularly in the US,
continues to improve on last year’s levels.
“As companies become more profitable and
strengthen their balance sheets, we expect management teams to
increasingly look at inorganic strategies to further drive the
growth that shareholders are demanding,” Isom added.
