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M&A lawyers and bankers expect 2013 to be a very good year. An annual survey by the Brunswick Group found 97 percent of respondents expect an increase in North American deal activity in the coming year, up from 48 percent in 2012.
However, specific drivers of deal activity are more muted, the survey found, with no single force standing out. Brunswick, a financial public relations firm, surveyed 100 M&A lawyers and bankers for its annual report, released Wednesday.
In 2012 an improving economy was named by 70 percent of the respondents as the leading expected deal driver, followed by cheap debt and cash-rich companies with 63 percent each. For the current survey, those numbers fell to 53 percent, 45 percent and 36 percent, respectively.
Still, some Valley lawyers expect those factors to have a major role in the coming year.
"There is still plenty of plenty of cash and debt is still cheap. That hasn't changed at all," said Douglas Cogen, co-chair of the M&A group at Fenwick & West in San Francisco. Those factors will continue to propel deal activity he added.
The leading driver is CEO confidence as stated by 64 percent of respondents, though that is up just 3 percent from the previous year. The second- and third-largest drivers continued to be an improving economy and cheap debt, though at the lower levels noted above.
Leif King, a partner in the corporate and private equity groups at Skadden, Arps, Slate, Meagher & Flom in Palo Alto, agrees those factors will continue to be significant drivers of deal activity. "2013 is looking to be like 2012 — but amplified. There are still lots of cash, cheap debt and private equity money and the economy has gotten better," he said.
Retail and consumer goods and technology and telecom companies are the sectors expected to have the greatest degree of consolidation.
This article originally appeared in The Recorder.
