and welcome you to our webcast: m&a market review welcome you to our webcast: m&a market...
TRANSCRIPT
and
welcome you to our webcast: M&A Market Review
welcome you to our webcast: M&A Market Review
Introduction
Moderator:
Mary Kathleen Flynnsenior editorThe Deal LLC
Expert Panel
Mark Bradyglobal head of M&A William Blair & Co. LLC
Expert Panel
Richard Lawsonmanaging director Huntsman Gay GlobalCapital LLC
Expert Panel
John Jones Jr.partnerPepper Hamilton LLP
Expert Panel
Martyn CurraghU.S. transaction servicesleaderPricewaterhouseCoopers
Favorable fundamentals led to strong M&A activity in first-half 2011, followed by decline in Q3 run rate
Relatively modest increase in deal volume
Significant increase in deal value
Megadeal activity fueled by corporate or strategic acquirers
Increase in deal size driven by PE buyers
Corporate divestitures continue to be key component of dealflow
0
50
100
150
200
250
300
350
400
2006 2007 2008 2009 2010 LTMSept.2011
369
Average deal value
340
242 229
233
301
$ Millions
Source: Thomson Reuters/PricewaterhouseCoopers
Deal volume
Source: Thomson Reuters/PricewaterhouseCoopers
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2006 2007 2008 2009 2010 LTMSept.2011
No. of deals
11,368 12,069
10,072
8,098 8,684
8,739
Pressures coming to bear on M&A
Continuing economic downturn
Private equity fundraising cycle
Supply vs. demand
Debt markets
Trends in M&A
Vendor due diligence (quality-of-earnings reports, environmental reports)
Third-party commercial due diligence
AUDIENCE POLL QUESTION
How will M&A activity in 2012 compare to 2011?
A) A slightly higher level of activityB) A slightly lower level of activityC) A large increase in activityD) A large decrease in activityE) The level will remain largely the same
Due to tightening of lending markets in second-half 2011, buyers are finding they can’t find financing
Some buyers are walking away because prices are too high, particularly in light of return objectives
Reasons many auctions are failing
Well-capitalized companies secure financing
Significant cash reserves
Credit increasingly more available
More strategic deals vs. private equity
Excess of cash on balance sheets of strategics
Significant capital overhang—nearly half-a-trillion dollars
Two major reasons for dramatic upward pricing trend
Lower midmarket vs. upper midmarket
AUDIENCE POLLING QUESTION
What sector will see the greatest level of activityin 2012?
A) HealthcareB) EnergyC) TechnologyD) Real estateE) Consumer and retailF) IndustrialsG) Other
Sector spotlight: Healthcaremost-active sectors
Long-term care Medical devices Hospital and pharma Physician practices
Deficit reduction plan and its effect on M&A
The impact of 2012 elections on M&A
Near-term outlook
AUDIENCE Q&A
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