Click here to close now.

Welcome!

Virtualization Authors: Lori MacVittie, Roger Strukhoff, Hovhannes Avoyan, XebiaLabs Blog, Pat Romanski

News Feed Item

PwC Says Fundamentals are Strong for U.S. Mergers & Acquisitions Activity in 2013

Divestiture activity reached highest level since 2005

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.

(Logo: http://photos.prnewswire.com/prnh/20100917/NY66894LOGO)

"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
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."

Private Equity
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.

Industry Sectors
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.

Learn more about PwC by following us online: @PwC_LLP, YouTube, LinkedIn, Facebook and Google +.

© 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.

SOURCE PwC

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
Chuck Piluso will present a study of cloud adoption trends and the power and flexibility of IBM Power and Pureflex cloud solutions. Speaker Bio: Prior to Data Storage Corporation (DSC), Mr. Piluso founded North American Telecommunication Corporation, a facilities-based Competitive Local Exchange Carrier licensed by the Public Service Commission in 10 states, serving as the company's chairman and president from 1997 to 2000. Between 1990 and 1997, Mr. Piluso served as chairman & founder of International Telecommunications Corporation, a facilities-based international carrier licensed by t...
How is unified communications transforming the way businesses operate? In his session at WebRTC Summit, Arvind Rangarajan, Director of Product Marketing at BroadSoft, will discuss how to extend unified communications experience outside the enterprise through WebRTC. He will also review use cases across different industry verticals. Arvind Rangarajan is Director, Product Marketing at BroadSoft. He has over 19 years of experience in the telecommunications industry in various roles such as Software Development, Product Management and Product Marketing, applied across Wireless, Unified Communic...
There are lots of challenges in IoT around secure, scalable and business friendly infrastructure for enterprises. For large corporations, IoT implementations are one of the top priorities of the decade. All industries are seeing a competitive need to sustain by investing in IoT initiatives. The value addition comes from improved customer service, innovative product and additional revenue streams. The data from these IP-connected devices can be leveraged for a variety of business applications as well as responsive action controls. The various architectural building blocks of an IoT ...
SYS-CON Events announced today that MangoApps will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY., and the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. MangoApps provides private all-in-one social intranets allowing workers to securely collaborate from anywhere in the world and from any device. Social, mobile, and easy to use. MangoApps has been named a "Market Leader" by Ovum Research and a "Cool Vendor" by Gartner...
SYS-CON Media announced today that @ThingsExpo Blog launched with 7,788 original stories. @ThingsExpo Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @ThingsExpo Blog can be bookmarked. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago.
The world's leading Cloud event, Cloud Expo has launched Microservices Journal on the SYS-CON.com portal, featuring over 19,000 original articles, news stories, features, and blog entries. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. Microservices Journal offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. Follow new article posts on Twitter at @MicroservicesE
SYS-CON Events announced today that robomq.io will exhibit at SYS-CON's @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. robomq.io is an interoperable and composable platform that connects any device to any application. It helps systems integrators and the solution providers build new and innovative products and service for industries requiring monitoring or intelligence from devices and sensors.
Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 16th Cloud Expo at the Javits Center in New York June 9-11 will find fresh new content in a new track called PaaS | Containers & Microservices Containers are not being considered for the first time by the cloud community, but a current era of re-consideration has pushed them to the top of the cloud agenda. With the launch of Docker's initial release in March of 2013, interest was revved up several notches. Then late last...
Wearable technology was dominant at this year’s International Consumer Electronics Show (CES) , and MWC was no exception to this trend. New versions of favorites, such as the Samsung Gear (three new products were released: the Gear 2, the Gear 2 Neo and the Gear Fit), shared the limelight with new wearables like Pebble Time Steel (the new premium version of the company’s previously released smartwatch) and the LG Watch Urbane. The most dramatic difference at MWC was an emphasis on presenting wearables as fashion accessories and moving away from the original clunky technology associated with t...
SYS-CON Events announced today that Litmus Automation will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Litmus Automation’s vision is to provide a solution for companies that are in a rush to embrace the disruptive Internet of Things technology and leverage it for real business challenges. Litmus Automation simplifies the complexity of connected devices applications with Loop, a secure and scalable cloud platform.
In 2015, 4.9 billion connected "things" will be in use. By 2020, Gartner forecasts this amount to be 25 billion, a 410 percent increase in just five years. How will businesses handle this rapid growth of data? Hadoop will continue to improve its technology to meet business demands, by enabling businesses to access/analyze data in real time, when and where they need it. Cloudera's Chief Technologist, Eli Collins, will discuss how Big Data is keeping up with today's data demands and how in the future, data and analytics will be pervasive, embedded into every workflow, application and infra...
As Marc Andreessen says software is eating the world. Everything is rapidly moving toward being software-defined – from our phones and cars through our washing machines to the datacenter. However, there are larger challenges when implementing software defined on a larger scale - when building software defined infrastructure. In his session at 16th Cloud Expo, Boyan Ivanov, CEO of StorPool, will provide some practical insights on what, how and why when implementing "software-defined" in the datacenter.
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, shared some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder of TeleStax, a...
So I guess we’ve officially entered a new era of lean and mean. I say this with the announcement of Ubuntu Snappy Core, “designed for lightweight cloud container hosts running Docker and for smart devices,” according to Canonical. “Snappy Ubuntu Core is the smallest Ubuntu available, designed for security and efficiency in devices or on the cloud.” This first version of Snappy Ubuntu Core features secure app containment and Docker 1.6 (1.5 in main release), is available on public clouds, and for ARM and x86 devices on several IoT boards. It’s a Trend! This announcement comes just as...
SYS-CON Events announced today that AIC, a leading provider of OEM/ODM server and storage solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. AIC is a leading provider of both standard OTS, off-the-shelf, and OEM/ODM server and storage solutions. With expert in-house design capabilities, validation, manufacturing and production, AIC's broad selection of products are highly flexible and are configurable to any form factor or custom configuration. AIC leads the industry with nearly 20 years of ...
SYS-CON Events announced today the IoT Bootcamp – Jumpstart Your IoT Strategy, being held June 9–10, 2015, in conjunction with 16th Cloud Expo and Internet of @ThingsExpo at the Javits Center in New York City. This is your chance to jumpstart your IoT strategy. Combined with real-world scenarios and use cases, the IoT Bootcamp is not just based on presentations but includes hands-on demos and walkthroughs. We will introduce you to a variety of Do-It-Yourself IoT platforms including Arduino, Raspberry Pi, BeagleBone, Spark and Intel Edison. You will also get an overview of cloud technologies s...
Internet of Things (IoT) will be a hybrid ecosystem of diverse devices and sensors collaborating with operational and enterprise systems to create the next big application. In their session at @ThingsExpo, Bramh Gupta, founder and CEO of robomq.io, and Fred Yatzeck, principal architect leading product development at robomq.io, will discuss how choosing the right middleware and integration strategy from the get-go will enable IoT solution developers to adapt and grow with the industry, while at the same time reduce Time to Market (TTM) by using plug and play capabilities offered by a robust I...
The only place to be June 9-11 is Cloud Expo & @ThingsExpo 2015 East at the Javits Center in New York City. Join us there as delegates from all over the world come to listen to and engage with speakers & sponsors from the leading Cloud Computing, IoT & Big Data companies. Cloud Expo & @ThingsExpo are the leading events covering the booming market of Cloud Computing, IoT & Big Data for the enterprise. Speakers from all over the world will be hand-picked for their ability to explore the economic strategies that utility/cloud computing provides. Whether public, private, or in a hybrid form, clo...
IoT is still a vague buzzword for many people. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. He also discussed how IoT is perceived by investors and how venture capitalist access this space. Other topics discussed were barriers to success, what is new, what is old, and what the future may hold. Mike Kavis is Vice President & Principal Cloud Architect at Cloud Technology Pa...
@ThingsExpo has been named the Top 5 Most Influential Internet of Things Brand by Onalytica in the ‘The Internet of Things Landscape 2015: Top 100 Individuals and Brands.' Onalytica analyzed Twitter conversations around the #IoT debate to uncover the most influential brands and individuals driving the conversation. Onalytica captured data from 56,224 users. The PageRank based methodology they use to extract influencers on a particular topic (tweets mentioning #InternetofThings or #IoT in this case) takes into account the number and quality of contextual references that a user receives.