What a difference a year makes. This time last year, the mergers and acquisitions market was booming. Money was cheap, valuations were high, debt covenants were “lite,” the $100 billion LBO seemed within reach, and experts were speculating that the entire concept of the business cycle was outdated.
Turn the page a year, and the M&A environment has skidded 180 degrees. Credit has dried up, multibilliondollar deals seem a thing of the past, significant deals already in the works have been repriced, and in a few cases cancelled altogether, and all the capital accumulated by private equity firms over the past few years seems to have no place to go.
In order to get a better handle on the current and future state of M&A, The Deal and accounting and advisory firm KPMG together conducted a study recently, in which questionnaires were sent to a wide range of professionals in the M&A business: executives in the corporate strategy and M&A departments of major companies as well as operators of private equity and hedge funds. Once the results were in, we followed up with interviews of numerous executives, in hopes of pinning down more precisely what exactly the world of M&A will look like in the next 12 to 18 months. What follows is an overview of the results, complete with detailed commentary on what it all means.