M&A TRENDS TO WATCH FOR IN 2014
Royse Law Firm, PC
Palo Alto, San Francisco, Los Angeles
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• Experts Bullish on 2014
– 68% of executives and outside advisors surveyed believe the 2014 M&A market will be
stronger than 2013. (Dykema Survey).
– M&A deals should increase 10-15%. (Morgan Stanley).
– 63% of M&A professionals surveyed anticipate their clients to initiate at least one
acquisition and 36% anticipate clients to complete a divestiture. (KPMG Survey).
• More Smaller and Mid-Market Deals
“Seventy-seven percent of respondents expect their respective deal activity will be valued under
$250 million, followed by 12 percent who anticipate their acquisitions will be valued between
$250 and $499 million, and five percent between $500 and $999 million.” (KPMG Survey).
• Why are they Bullish?
Excess cash on the balance sheet, i.e. inflated stock prices
Historically low interest rates
2013 Momentum: “volume increased by 10 percent from 808 deals per month in the first six
months of 2013 to 886 deals per month from July through November.” (PwC).
• Media & Telecommunications
― 44% of M&A Professionals expect this sector to have the most activity. (KMPG Survey)
― There is “pent-up demand” for M&A activity in the media. (KPMG)
― Media Deals during the first three quarters in 2013 totaled $77.1 billion, up from $49.8
billion in 2012 and the number of deals was up 55%. (PwC)
• Real Estate
― Fastest Growing Industry in the US
― In 2013, deal volumes increased by 40%. (PwC)
• Health Care and Pharmaceuticals
― 41% of M&A Professionals expect this sector to have the most activity. (KPMG Survey)
DEAL TERMS TRENDS
70% surveyed said tax planning Is important
26% consider tax after deal terms closed
39% said tax considerations cause deals to be more complicated
32% said no increased deal complexity resulting from tax
Top M&A Challenge is valuation disparity, meaning more earnout structures
Nixon Peabody MAC Study
98% contain a MAC closing condition (up from prior year)
89% have “disproportionately affect” carveouts (up from prior year)
53% “would reasonably be expected to” (up from prior year)
Increase in exclusions to MAC (pro-target)
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