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Dykema Unveils Results From 8th Annual M&A Outlook Survey

Market Stabilization May be Near, but a Third of Respondents Predict a Negative U.S. Economy in 2013

Detroit –– The coming months will showcase an evolving landscape for U.S. and international businesses in the M&A market, according to Dykema’s 2012 M&A Outlook Survey. The eighth annual survey of leading company executives and outside advisors examined how the U.S. economy, financing challenges, the U.S. political environment and other domestic and global matters will impact the M&A market in the coming year.

The survey, measuring the attitudes and perspectives of 242 respondents, revealed that after some increasing negativity, respondents believe 2013 is a year for cautious optimism in the U.S. M&A market. Even with the uncertainty of the fiscal cliff and the still unfolding European financial crisis, respondents were marginally more likely to express confidence that M&A would be strong (28 percent) or neutral (58 percent) compared to sentiments last year. Looking at the overall U.S. economy, respondents were at a near even split between believing the economy would improve or potentially worsen.

“Our country still faces economic challenges, as well as significant regulatory changes on the horizon, and it should not come as a surprise that the respondents are divided in their outlook on the economy,” said Dave Cellitti, leader of Dykema’s M&A practice.

“Although a solid amount of respondents predicted a negative economy and M&A market next year, there were still some glimmers of optimism that M&A may have hit bottom and there could be headroom next year,” said Tom Vaughn, member of the firm’s M&A practice.

With all the ongoing external shocks to the economy, including the continuing financial crisis in Europe, possible sequestration leading to austerity measures here, and the aftereffects of the presidential election, respondents expressed many reservations about the future. A solid third of respondents predict a negative U.S. economy and a fifth anticipate a weaker M&A market.

“After the election, there are still many things that have yet to be decided, and that uncertainty has impacted our economy and this market,” explained Jeff Dalebroux, director of Dykema’s Business Services Department. “As we await some critical decisions from Congress, we have to turn to industry insiders, like the respondents in this survey, for perspective on the year to come.”

According to Dykema, the survey yielded a number of other interesting conclusions, including:

 Capital is plentiful. Many buyers say they are keeping powder dry, waiting for the right targets.

 Strategic buyers will continue to drive the U.S. M&A market although respondents believe that both financial and foreign buyers will increase their influence in 2013.

 As of this writing, the next shock that needs to be resolved, to help stabilize the M&A market is the so-called fiscal cliff—and what combination of spending cuts and taxes its resolution will bring.

 Almost all respondents agreed that we are entering a higher-tax environment. Surprisingly though, fewer than expected dealmakers said that they are trying to close deals before tax rates change in January.

 Distressed deals are not expected to rise in volume, in contrast to last year when respondents were more pessimistic about the economic outlook.

Following the November federal elections, Dykema distributed the survey via e-mail to a group of senior executives and outside advisors including CEOs, CFOs and other company officers. Survey respondents were asked about the future of the market, cross-border deals and the general strength of the economy. The results were revealed at Dykema’s State of the Economy and 2012 M&A Outlook events in Chicago, Detroit, and Los Angeles where distinguished speakers including Kristen Scarpa, Vice President and Investment Strategist at Barclays, discussed the issues that are shaping the economy, the M&A market and what the next 12 months will hold.

For a copy of the full results of the survey, please contact Martin Grego at (312) 252-4117 or (mgrego@greentarget.com) or visit http://www.dykema.com/mergers/.

About Dykema

Dykema serves business entities worldwide on a wide range of complex legal issues. Dykema lawyers and other professionals in 11 U.S. offices work in close partnership with clients – from start-ups to Fortune 100 companies – to deliver outstanding results, unparalleled service and exceptional value in every engagement. To learn more, visit www.dykema.com and follow Dykema on Twitter http://twitter.com/Dykema.