Wednesday, April 01, 2009

Will the stimulus package stimulate M&A?

Posted on April 1, 2009 at 1:26 PM,
M&A advisers don't see such a rosy future for their business, at least not in the near term, according to an annual survey by communications firm Brunswick Group LLC. Only 29% of the 59 respondents -- including bankers, lawyers and other market players -- maintain there will be signs of recovery in "a year to eighteen months" -- down from 52% who shared that view in April 2008. Indeed, 69% believe it will take up to five years to return to the level of M&A activity seen in 2007, up 28% from last year's survey. Respondents cited the lack of credit (39%), slowing economy (26%), lack of CEO confidence (26%) and equity market decline (9%) as the most significant factors stifling M&A. Asked about the likely impact of the stimulus package on dealmaking, 44% believe the package will have a positive affect on M&A if it is able to "restore confidence" and "ease credit" while 46% believe the package will have a neutral effect. "While advisers caution that recovery will take time, the survey indicates some areas where we can expect activity in 2009," Brunswick senior partner Steven Lipin said in a statement. "Lower company valuations as well as the potential impact of the stimulus package on both credit and confidence could drive domestic deals, especially in the healthcare and financial sectors, and prompt unsolicited transactions."Topping the list of sectors considered ripe for consolidation are healthcare (25%), financial services (24%), energy (15%) and consumer goods/retail (14%). - Claire Poole

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