Deliver Your News to the World

ACG/Thomson 2006 DealMaker’s Survey Records High Confidence Level by Private Equity Professionals


2005 Was Best Year for M&A Since 2000

Chicago and New York, 01/10/2006, On the heels of strong capital raising, investments, and M&A activities in 2005, 91% of the 355 private equity professionals worldwide surveyed in the ACG/Thomson DealMaker’s Survey say the current environment for mergers and acquisitions and corporate growth is good or excellent. Fifty-nine percent think the number of M&A transactions will increase over the next six months, while 31% say it will stay the same, and 10% say it will decrease.

Private equity professionals say the primary driver of mergers and acquisitions is:

1. Hefty capital reserves of some acquirers (29%)

2. Good multiples for companies being acquired (22%)

3. Improved domestic economy (18%)

4. Good multiples for acquirer (13%)

5. Historically low interest rates (10%)

6. Increased investment banking activity (5%)

According to Thomson Financial, 2005 was the best year for global M&A activity since 2000. Worldwide, $2.70 trillion of mergers and acquisitions were announced. In the United States, $1.13 trillion of deals were announced.

“Private equity professionals are playing an increasingly important role in the financial markets, managing huge amounts of assets, buying, selling and merging companies around the world, and teaming up in club deals to compete for buyouts of large public companies,” said Daniel A. Varroney, president and CEO of ACG (the Association of Corporate Growth). “Of course, all this activity is sustained and rewarded by pension funds which look to private equity as an increasingly important part of their portfolios.”

Private Equity

Private equity professionals say that the private equity deal size and type that hold the most promise are:

1. Middle market buyouts and recapitalizations (33%)

2. Small buyouts (31%)

3. Early stage venture capital (17%)

4. Later stage venture capital (9%)

5. Mezzanine (6%)

6. Mega buyouts (4%)

Geographically, the areas with the greatest potential for private equity investments are:

1. United States (54%)

2. China (16%)

3. Western Europe (7%)

4. India (6%)

5. Eastern Europe (3%)

6. Canada (3%)

7. Japan (2%)

8. Middle East/Africa (2%)

9. Russia (2%)

10. South America (2%)

“The intense competition for buyouts of all sizes is causing private equity firms to rethink their approach toward areas like deal sourcing, geography, sector focus and due diligence,” said Adam Reinebach, Vice President with Thomson Financial and Publisher of Buyouts Magazine. “However, at the same time, challenges like rising multiples and the prevalence of auctions have not dampened the overall enthusiasm toward leveraged buyouts, which we expect to remain high well into 2006.”

In an increasingly competitive environment, the primary reason private equity professionals won their most recent deals is:

1. Lack of competition (40%)

2. Reputation or brand of their firm (38%)

3. Industry sector knowledge (32%)

4. Pre-existing relationship with company management (30%)

5. Paid highest price (10%)

The primary means of sourcing transactions is:

1. Through an intermediary/investment bank (42%)

2. Call potential targets directly (29%)

3. Attend conferences/networking events (13%)

4. Contact other private equity firms (5%)

Private equity professionals say there is a surplus of private equity capital available for investment, calling the current amount:

1. Much too high (41%)

2. A little higher than it should be (37%)

3. Appropriate (17%)

4. A little lower than it should be (4%)

5. Much too low (1%)

Mergers and Acquisitions

Private equity professionals see the following sectors experiencing the most merger activity in 2006:

1. Healthcare and life sciences (33%)

2. Technology (20%)

3. Business services (17%)

4. Financial services (9%)

5. Consumer products and services (8%)

6. Manufacturing and distribution (7%)

7. Retail (2%)

Nearly half (47%) of private equity professionals expect to be involved in an international cross-border deal in 2006. Geographically, they anticipate these deals will be with:

1. Western Europe (42%)

2. China (38%)

3. Canada (33%)

4. United States (27%)

5. India (19%)

6. Eastern Europe (15%)

7. Latin America (11%)

8. Japan (9%)

9. Russia (7%)

10. South America (7%)

11. Middle East/Africa (6%)

Respondents say the primary objective of mergers and acquisitions is to:

1. Increase revenues and profitability (48%)

2. Grow market share (31%),

3. Gain technology (8%)

4. Acquire a competitor (4%)

5. Diversify geographically (3%)

6. Enter a new industry (2%)

7. Gain talent (1%)

The company attribute that matters most to an acquirer today is:

1. Sales and revenue growth (32%)

2. Attractive business sector (23%)

3. Management strength (16%)

4. Profitability (15%)

5. Proprietary technology (10%)

6. Corporate reputation (3%)

According to private equity professionals, the primary reason for failure of mergers and acquisitions is:

1. Overpaying (36%)

2. Poor post-merger integration follow-through (26%)

3. Poor pre-merger integration planning (16%)

4. Lack of due diligence (9%)

5. Lack of management buy-in (7%)

6. Lack of shareholder buy-in (3%)

7. Lack of employee incentives (1%)

Survey Methodology

The survey, conducted in December 2005, was completed by 355 ACG members and Thomson Financial customers involved in private equity. The majority of respondents were from the United States (287), where 39 states were represented. Internationally, executives from 28 countries completed the survey.

About ACG

Founded in 1954, the Association for Corporate Growth ( is a global association for professionals involved in corporate growth, corporate development, and mergers and acquisitions. Today ACG stands at nearly 10,000 members from corporations, private equity, finance, and professional service firms representing Fortune 500, Fortune1000, FTSE 100, and mid-market companies in 48 chapters in North America and Europe.

About Thomson Financial

Thomson Financial is a US$1.73 billion provider of information and technology solutions to the worldwide financial community. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation (, a global leader in providing integrated information solutions to more than 20 million business and professional customers in the fields of law, tax, accounting, financial services, higher education, reference information, corporate e-learning and assessment, scientific research and healthcare. With revenues of US$8.10 billion, The Thomson Corporation lists its common shares on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC).


This news content was configured by WebWire editorial staff. Linking is permitted.

News Release Distribution and Press Release Distribution Services Provided by WebWire.