More Good Times Ahead for M.&A., Survey Finds

By MICHAEL J. DE LA MERCED, NYT DealBook blog: Deal-makers are by their very nature an optimistic lot. And as many of the top legal specialists in the field head down to the annual Tulane Corporate Law Institute in New Orleans on Wednesday, it appears that their confidence is rising. Of the roughly 40 top M.&A. bankers and lawyers surveyed by the Brunswick Group, a public relations firm, about 92 percent said they believed the rest of this year would bring continued strong growth in mergers and acquisitions. Much of that was driven by a strong first quarter for deal-making, capped last week by AT&T’s blockbuster $39 billion deal for T-Mobile USA. M.&A. volume rose 58 percent for the quarter from the period a year earlier, in the best start since 2007, according to preliminary data from Thomson Reuters. Roughly half of the deal-makers surveyed by Brunswick said they believe that the biggest contributor to rising M.&A. was greater confidence among management teams and company boards. (Other factors include the improving economy and more buying firepower in the form of cash on corporate balance sheets and the availability of cheap credit.) That confidence could be seen in part through hostile deals, including an unsolicited $5.7 billion bid for Cephalon by Valeant Pharmaceuticals International announced on Tuesday. According to those surveyed, the majority of deals seen this year will continue primarily to be domestic ones by emboldened strategic buyers. Still, Asia is considered to be the most fertile source of international buyers of American assets — so long as those would-be bidders are not stymied by regulatory hurdles, which 40 percent of respondents identified as the most likely obstacles to deals. Much of the rest of this year’s survey mirrored the results of last year’s, including the most likely active sectors for deals (health care and energy) and the most likely problems for hostile bidders (overpaying and staggered boards, in which only a portion of directors are up for election in any given year). But 57 percent of respondents said that they expected more deals to be done using just cash, more than double from last year. Part of that is likely a reflection of the tremendous stores of cash companies have built up, as well as the willingness of banks to lend. Part of it may also be some lingering uncertainty over the potential vicissitudes of the markets. Yet it may also reflect even more bullishness, suggesting that the shares of potential acquirers still have some room to grow and therefore are not worth using as currency — at least not right now. In other words, the good times may continue to roll. 2011 Brunswick Group M&A Survey