Acquisitions are currently high on the agenda in many German M&A departments – companies are showing increasing confidence in the mergers and acquisitions market and relying on their own liquidity to finance transactions.
In contrast, bankers and advisers in the market are working primarily on sales at present. Both groups view market consolidation as an increasingly important deal driver.
Those are the key findings of the survey of the M&A panel II 2013, polled now for the eighth time by CMS Hasche Sigle and FINANCE magazine. The heads of the M&A departments at German companies plus leading investment bankers and M&A consultants provide anonymous assessments of the market for the survey.
Overall, sentiment is much improved: 32 per cent of the M&A chiefs surveyed and 27 per cent of bankers and advisers stated that they have an above-average M&A pipeline. In the spring, there were already indications that the economic situation is no longer hurting M&A deal-makers in their projects as much as last autumn. Different priorities are nevertheless being set. Company managers are using the market principally as buyers, more clearly than at any time since the survey started in February 2011. Around 74 per cent are currently working chiefly on acquisitions; joint ventures are high on the list for a further 21 per cent. More than two thirds of M&A consultants, on the other hand, are dealing mostly with sales instructions, with joint ventures not playing any part at all.
"Growing professionalism also among SMEs is evident from the fact that more and more firms have their own high-calibre M&A departments," says Dr Thomas Meyding, partner at CMS Hasche Sigle. "Inhouse teams can comfortably cover acquisitions. In view of the trend towards auction procedures, M&A consultants are usually engaged on the vendor side due to their overview of potential buyers."
Sector consolidation is increasingly a trigger for M&A deals, in addition to growth aspects and technology transfer. M&A bosses believe the importance of market consolidation as a deal driver has reached its highest level to date. Investment bankers and advisers also rate this factor higher than in February. The panellists feel that greater stability in the individual sectors will allow them to cope better with future crises. M&A chiefs seem to be intent on taking an active part in this consolidation process rather than themselves becoming a takeover target.
The two groups disagree on the impact of general economic uncertainty on M&A processes. While M&A bosses often no longer view this as a real reason for transactions to fail, bankers and consultants again attribute greater significance to this aspect as a deal breaker.
"Instructions to sell in an uncertain environment are often withdrawn if interest does not meet expectations and there is no pressure to sell," says Meyding. "The uncertain situation generally means that mergers and acquisitions now take much longer and buyers play it a lot safer."
