Deals: Bolt on, spin off

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US CEO Insights

Dr. Larry Kaiser

President and CEO, Temple University Health System

"We’re about a $1.5 billion system right now. To compete in this market, we need to probably be in the $3 to $5 billion dollar range.... Therefore, one would think that consolidation is something that will likely occur, just as it is occurring in many other places across the country.”

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How can we take advantage of a potentially healthier deals market in 2013?

US CEOs are more intent on M&A in 2013 than their global peers, and they're concentrating on consolidation and expansion in the US market. Forty-two percent of US CEOs say they're planning to complete a domestic deal this year. Thirty percent say they completed a domestic deal in 2012. (Explore the data)

The US deals market, while in better shape than some markets elsewhere, remains restrained. Yet the fundamentals for growth in the deals market are in place. Interest rates are low and over $1 trillion in cash sits on corporate balance sheets. (Watch the CEO insights videos)

Some sector-specific shifts may drive activity. Sweeping reforms in the Affordable Care Act are likely to spur consolidation as healthcare revenue models change. Another example: Financial services companies continue to pursue divestitures to bolster capital levels and unlock asset value.

In fact, divestitures have been important—representing around a third of deal volume in 2012—and they are expected to retain a prominent strategic position in 2013 for US and European CEOs.

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