2009 M&A activity to be fueled by 'merger of necessity'

2009 M&A activity to be fueled by merger of necessity
Download 2009 M&A activity to be fueled by merger of necessity

Financing continues to be a challenge while distressed opportunities across industries are available for interested buyers. Innovation will be key for private equity as the industry evolves in the new climate

The year 2008 was a challenging period for dealmakers. Mergers and acquisitions (M&A) in the United States (US) were hampered by an ever dwindling credit market. Should current conditions continue into the new year and financing remain limited, M&A activity in 2009 will be on the light side with a few silver linings. The deal landscape will be dominated by distressed investments across sectors including financial services, automotive, consumer products and retail, according to the Transaction Services group of PwC.

US deal volume for the 11 months of 2008 was down by 22 percent from the same period last year, while deal value decreased from $1.6 trillion to $1.1 trillion. Private equity remained relatively quiet in 2008. Private equity deal value dropped 75 percent to $127.4 billion from $501.7 billion. In 2009, distressed opportunities are available for interested buyers, and the President-elect's stimulus plan may generate opportunities in the nation's infrastructure, energy, healthcare and technology. Private investment in public equity transactions (PIPEs) gained momentum in 2008 and are likely to increase in the new year.