|By PR Newswire||
|December 6, 2012 08:00 AM EST||
NEW YORK, Dec. 6, 2012 /PRNewswire/ -- Ongoing access to capital and financing, strengthened balance sheets and divestiture activity will continue to fuel deal activity in 2013, according to PwC US. An acceleration of deals taking place during the final months of 2012 may result in a lull in activity during the first quarter; however, these sound deal fundamentals are creating optimism that the balance of 2013 will be a stronger year for U.S. mergers and acquisitions (M&A). According to PwC's U.S. M&A outlook, dealmakers remain hyper vigilant on diligence during the M&A decision making process, analyzing each outcome and the various impacts on investment and return scenarios to achieve certainty of deal success.
"The fundamentals for sustained M&A activity in 2013 are solid, with improving corporate confidence, increasing private equity activity from both a buy and sell side perspective, and relatively healthy debt markets. There remains strong competition for quality assets as both corporates and private equity continue to seek out deals to fuel their growth and deploy capital," said Martyn Curragh, PwC's U.S. Deals Leader. "We've been supporting a range of buyers and sellers across a broad spectrum of industries, helping them raise capital through high yield offerings and providing diligence and valuation analyses for potential deals. Dealmakers have been very cautious and disciplined in evaluating transactions. They are placing a premium on a thorough analysis of potential risks and exposures and are seeking to ensure there is broad functional support to successfully manage deal execution and reduce the risk of value leakage."
With capital ready to be deployed, along with the increasing availability of financing, PwC expects companies and financial sponsors to use M&A to enhance their growth prospects in the new year. Corporate cash levels remain steady at $1.1 trillion for the S&P 500, indicating continued opportunity for companies to put their capital to work through M&A. In the eleven months ending November 2012, there were a total of 7,585 transactions representing $705 billion in disclosed deal value. In October alone, deal value spiked to a 14 month high, reaching $96 billion and with 754 deals, October was the most active month since August 2011. In terms of deal size -- and with the absence of "transformative" mega deals -- middle market deals have been the "silver lining" for deal activity, accounting for 98 percent through November in 2012. PwC expects this trend in middle market deals to continue in 2013.
"Both corporate and private equity players are thinking about transactions to expand market share, build brands and fuel their long term strategic plans. In today's environment, companies must be agile to act with discipline, speed, and unbiased thoroughness to execute when a good potential acquisition comes to market," said John Potter, Deals partner at PwC. "A recent poll during our M&A integration webcast found that 89 percent of executives expect to see similar or increased M&A activity over the next year, with 45 percent expected to plan a deal within the next six months. Deal making, whether by acquisition or divestiture, is very much at the top of the agenda for those pursuing new growth opportunities in 2013."
In light of available cash and growth strategies, a desire to get deals done has heightened the competition among corporate and private equity buyers. According to PwC, more bidders are taking a longer look at a given target over the past 12 months.
Divestitures accounted for 43 percent of total disclosed deal value and 30 percent of deals overall, the highest level since 2005, and should remain a key driver for deal making in the year ahead as companies seek to unlock value in assets. Those that are currently looking to divest assets have stepped up the sell side diligence process to showcase potential value for quality assets for potential buyers.
"Successful divestitures in today's marketplace require a sharp focus and rationale around the opportunities that an asset has to grow. An accurate portrayal of long-term deal value for an asset helps ensure that a buyer and a seller can meet at a reasonable price and unlock value and opportunity for the future of both companies involved in the deal," according to Ron Chopoorian, PwC's U.S. Divestitures Leader. "With preparedness and rigor around the sell side process serving as essential components for successful divestitures, we are seeing auctions become broader and participants 'staying in play' for longer periods of time."
With a total of 1,334 transactions and $128 billion in value, private equity deals accounted for 18 percent of total deal value, indicating that while corporates continue to drive overall activity, private equity's involvement in the marketplace remains very active. With roughly $1trillion in dry powder waiting to be deployed, sophisticated private equity buyers are scenario planning for every deal outcome to generate the best returns for their investments.
According to PwC, private equity continues to prepare for multiple exit options, including refinancing debt, recapitalizations, IPOs and sales to strategic buyers to take advantage of shifting windows of opportunity. On the buy side, private equity remains a very active deal participant, especially in the middle market and with divested corporate assets. The increased availability of high yield debt is a main driver fueling private equity activity in the U.S. marketplace.
With creditors' thirst for higher yields, financing for transactions remains attractive for financial sponsors to pursue new deals and monetize existing investments. While the market remains extremely competitive for high yield offerings, businesses raising capital should be thoroughly prepared and have the infrastructure in place to address the needs of their public investors. According to PwC, proper preparation for debt financing transactions enables a business to communicate a compelling story and address creditor inquiries in a timely fashion. This debt preparedness helps add increased certainty to a deal for sellers, and guide buyers through an accelerated time table to complete a transaction.
Notable sectors that continue to present opportunities include:
Oil & Gas -- Both volume and value levels are close to 2011 levels with an increase in mega deals led by private equity funds that have increased their investment and exposure to the energy industry. PwC expects deal activity to increase in 2013, with ongoing consolidation in the shale plays very likely. Large international oil companies are expected to continue to increase their positions in the unconventional plays in North America. Private equity will likely continue to invest heavily in the energy space -- both upstream and midstream. Foreign buyers may increase activity in 2013 looking to corporate transactions to help them increase inventory of projects as well as the size and quality of their management teams. According to PwC, the likelihood of more energy related mega deals in 2013 is certainly higher.
Financial Services -- Deal activity remains steady compared to 2011 in terms of announced deals. Despite receding asset quality and valuation concerns across the industry, the prolonged period of implementation of new regulatory standards has created additional impediments to deals. Going forward, both domestic and global financial institutions continue to seek divestiture of non-strategic operations in seeking to further bolster capital levels and unlock asset value. At the same time, as organic loan growth has slowed, many banks will look to acquire asset-generating businesses. PwC expects valuation gaps will narrow which, coupled with resolution of regulatory uncertainty, will likely drive increased deal volume in the coming year. While there has been limited private equity activity within the insurance and banking sectors, there has been an increase in private equity deal activity within the asset management sector, a trend PwC expects to continue in 2013.
Healthcare & Pharmaceuticals -- Throughout 2012, health industries M&A activity was hindered by the uncertainty of the presidential election. Now with a near-certain implementation of the Affordable Care Act (ACA) and its sweeping reforms impacting business models, PwC expects 2013 to be a banner year for M&A activity across health industries. For healthcare providers, this momentum will be buoyed by economic pressure to accept lower reimbursement rates and as this pressure mounts, margin compression on single-site or inefficient operators will force divestiture or partnering strategies. Consistent with the last few years, continued acceleration of deals involving financially struggling providers seeking lifelines from larger, healthier systems is likely to continue. In addition to provider-to-provider deals, 2013 may see the trend of providers partnering or merging with payers continue. For payers, no deals are more prevalent than the large health insurers positioning for the impact of the insurance exchanges and increased Medicare and Medicaid enrollments. And while high-profile, high-value deals of this nature may be less frequent in 2013, PwC expects health insurers to continue seeking enrolment expansion through M&A during 2013. In the pharmaceutical industry, large companies continue to reshuffle their businesses portfolios and seek new avenues for growth in emerging markets. Key players in pharma continue to experiment with new business models involving non-pharma categories, joint ventures or divestitures as a means to unlock shareholder value. Consolidation remains active among specialty pharma and personalized medicine companies, while medical device companies explore the need to gain scale in the U.S. and abroad.
Technology -- While technology deal volume trended lower in 2012, deal value exceeded 2011 through the third quarter -- momentum which began in the final three months of 2011 with large mega deals contributing to a record quarter for deal value. Despite higher overall values through September 2012, PwC expects a slight reduction in full year acquisition value among technology companies due in part to the global macroeconomic environment. However, PwC sees a silver lining in very early signs of growing activity among large technology companies to re-evaluate their product and business portfolios and initiate divestitures. According to PwC, there are multiple drivers for future M&A activity in the sector including changes in enterprise customers' demand towards cloud technology services, continuing high growth in social and mobile sectors and a favorable appetite among technology oriented private equity funds for slower growing but cash flow producing assets.
Note to editors: A snapshot of PwC's data for U.S. M&A activity is available upon request. The M&A figures captured in PwC's M&A outlook is a compilation of data from Thomson Reuters with analysis by PwC. This data is an aggregate of deal activity from around the world and includes multiple sources to confirm deal occurrence and respective characteristics. U.S. deals are defined as all deals done by U.S. acquirers including U.S. outbound investments. Deal value is defined as the target company's ranking value including net debt. A divestiture is defined as the partial or full disposition of an asset or investment (e.g. carve-out, asset sale, etc.). Middle market deals are defined as deals with a value of $1 billion or less.
For further insight on the outlook for the M&A landscape in 2013, join PwC's Deals webcast on Tuesday, December 18th at 1:00 p.m. E.T. To register, visit: www.meetpwc.com/MandAoutlook2013.
PwC's Deals practitioners help corporate and private equity executives navigate transactions to increase value and returns. In today's increasingly daunting economic and regulatory environment, our experienced M&A specialists assist clients on a range of transactions from smaller and mid-sized deals to the most complex transactions, including domestic and cross-border acquisitions, divestitures and spin-offs, capital events such as IPOs and debt offerings, and bankruptcies and other business reorganizations. We help clients with strategic planning around their growth and investment agendas and advise on business-wide risks and value drivers in their transactions for more empowered negotiations, decision-making and execution. We help clients expedite their deals, reduce their risks, capture and deliver value to their stakeholders and quickly return to business as usual. Our local and global deal strength is derived from over 1,400 deal professionals in 21 cities in the U.S. and over 9,800 deal professionals across a global network of firms in 75 countries. In addition, our network firm PwC Corporate Finance provides investment banking services within the U.S. For more information, visit www.pwc.com/us/deals.
About the PwC Network
PwC firms help organizations and individuals create the value they're looking for. We're a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
© 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
In his session at @ThingsExpo, Lee Williams, a producer of the first smartphones and tablets, will talk about how he is now applying his experience in mobile technology to the design and development of the next generation of Environmental and Sustainability Services at ETwater. He will explain how M2M controllers work through wirelessly connected remote controls; and specifically delve into a retrofit option that reverse-engineers control codes of existing conventional controller systems so they don't have to be replaced and are instantly converted to become smart, connected devices.
Sep. 4, 2015 02:00 AM EDT Reads: 265
The 3rd International WebRTC Summit, to be held Nov. 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 15th International Cloud Expo, 6th International Big Data Expo, 3rd International DevOps Summit and 2nd Internet of @ThingsExpo. WebRTC (Web-based Real-Time Communication) is an open source project supported by Google, Mozilla and Opera that aims to enable bro...
Sep. 4, 2015 01:15 AM EDT Reads: 1,627
SYS-CON Events announced today that Pythian, a global IT services company specializing in helping companies leverage disruptive technologies to optimize revenue-generating systems, has been named “Bronze Sponsor” of SYS-CON's 17th Cloud Expo, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Founded in 1997, Pythian is a global IT services company that helps companies compete by adopting disruptive technologies such as cloud, Big Data, advanced analytics, and DevOps to advance innovation and increase agility. Specializing in designing, imple...
Sep. 4, 2015 12:00 AM EDT Reads: 384
Containers are not new, but renewed commitments to performance, flexibility, and agility have propelled them to the top of the agenda today. By working without the need for virtualization and its overhead, containers are seen as the perfect way to deploy apps and services across multiple clouds. Containers can handle anything from file types to operating systems and services, including microservices. What are microservices? Unlike what the name implies, microservices are not necessarily small, but are focused on specific tasks. The ability for developers to deploy multiple containers – thous...
Sep. 3, 2015 10:00 PM EDT Reads: 196
SYS-CON Events announced today that IceWarp will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. IceWarp, the leader of cloud and on-premise messaging, delivers secured email, chat, documents, conferencing and collaboration to today's mobile workforce, all in one unified interface
Sep. 3, 2015 10:00 PM EDT Reads: 491
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo, November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be.
Sep. 3, 2015 08:30 PM EDT Reads: 166
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome,” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
Sep. 3, 2015 04:30 PM EDT Reads: 433
As more and more data is generated from a variety of connected devices, the need to get insights from this data and predict future behavior and trends is increasingly essential for businesses. Real-time stream processing is needed in a variety of different industries such as Manufacturing, Oil and Gas, Automobile, Finance, Online Retail, Smart Grids, and Healthcare. Azure Stream Analytics is a fully managed distributed stream computation service that provides low latency, scalable processing of streaming data in the cloud with an enterprise grade SLA. It features built-in integration with Azur...
Sep. 3, 2015 02:45 PM EDT Reads: 390
With the proliferation of connected devices underpinning new Internet of Things systems, Brandon Schulz, Director of Luxoft IoT – Retail, will be looking at the transformation of the retail customer experience in brick and mortar stores in his session at @ThingsExpo. Questions he will address include: Will beacons drop to the wayside like QR codes, or be a proximity-based profit driver? How will the customer experience change in stores of all types when everything can be instrumented and analyzed? As an area of investment, how might a retail company move towards an innovation methodolo...
Sep. 3, 2015 02:30 PM EDT Reads: 516
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
Sep. 3, 2015 02:30 PM EDT Reads: 966
SYS-CON Events announced today the Containers & Microservices Bootcamp, being held November 3-4, 2015, in conjunction with 17th Cloud Expo, @ThingsExpo, and @DevOpsSummit at the Santa Clara Convention Center in Santa Clara, CA. This is your chance to get started with the latest technology in the industry. Combined with real-world scenarios and use cases, the Containers and Microservices Bootcamp, led by Janakiram MSV, a Microsoft Regional Director, will include presentations as well as hands-on demos and comprehensive walkthroughs.
Sep. 3, 2015 02:15 PM EDT Reads: 416
Contrary to mainstream media attention, the multiple possibilities of how consumer IoT will transform our everyday lives aren’t the only angle of this headline-gaining trend. There’s a huge opportunity for “industrial IoT” and “Smart Cities” to impact the world in the same capacity – especially during critical situations. For example, a community water dam that needs to release water can leverage embedded critical communications logic to alert the appropriate individuals, on the right device, as soon as they are needed to take action.
Sep. 3, 2015 01:30 PM EDT
WebRTC services have already permeated corporate communications in the form of videoconferencing solutions. However, WebRTC has the potential of going beyond and catalyzing a new class of services providing more than calls with capabilities such as mass-scale real-time media broadcasting, enriched and augmented video, person-to-machine and machine-to-machine communications. In his session at @ThingsExpo, Luis Lopez, CEO of Kurento, will introduce the technologies required for implementing these ideas and some early experiments performed in the Kurento open source software community in areas ...
Sep. 3, 2015 01:15 PM EDT Reads: 110
Consumer IoT applications provide data about the user that just doesn’t exist in traditional PC or mobile web applications. This rich data, or “context,” enables the highly personalized consumer experiences that characterize many consumer IoT apps. This same data is also providing brands with unprecedented insight into how their connected products are being used, while, at the same time, powering highly targeted engagement and marketing opportunities. In his session at @ThingsExpo, Nathan Treloar, President and COO of Bebaio, will explore examples of brands transforming their businesses by t...
Sep. 3, 2015 12:30 PM EDT Reads: 290
With the Apple Watch making its way onto wrists all over the world, it’s only a matter of time before it becomes a staple in the workplace. In fact, Forrester reported that 68 percent of technology and business decision-makers characterize wearables as a top priority for 2015. Recognizing their business value early on, FinancialForce.com was the first to bring ERP to wearables, helping streamline communication across front and back office functions. In his session at @ThingsExpo, Kevin Roberts, GM of Platform at FinancialForce.com, will discuss the value of business applications on wearable ...
Sep. 3, 2015 10:45 AM EDT
SYS-CON Events announced today that Micron Technology, Inc., a global leader in advanced semiconductor systems, will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Micron’s broad portfolio of high-performance memory technologies – including DRAM, NAND and NOR Flash – is the basis for solid state drives, modules, multichip packages and other system solutions. Backed by more than 35 years of technology leadership, Micron's memory solutions enable the world's most innovative computing, consumer,...
Sep. 3, 2015 10:00 AM EDT Reads: 285
17th Cloud Expo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some form of XaaS – software, platform, and infrastructure as a service.
Sep. 3, 2015 10:00 AM EDT Reads: 1,604
As more intelligent IoT applications shift into gear, they’re merging into the ever-increasing traffic flow of the Internet. It won’t be long before we experience bottlenecks, as IoT traffic peaks during rush hours. Organizations that are unprepared will find themselves by the side of the road unable to cross back into the fast lane. As billions of new devices begin to communicate and exchange data – will your infrastructure be scalable enough to handle this new interconnected world?
Sep. 3, 2015 09:30 AM EDT Reads: 261
While many app developers are comfortable building apps for the smartphone, there is a whole new world out there. In his session at @ThingsExpo, Narayan Sainaney, Co-founder and CTO of Mojio, will discuss how the business case for connected car apps is growing and, with open platform companies having already done the heavy lifting, there really is no barrier to entry.
Sep. 3, 2015 09:30 AM EDT Reads: 216
SYS-CON Events announced today that the "Second Containers & Microservices Expo" will take place November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities.
Sep. 3, 2015 09:30 AM EDT Reads: 652