Predators have continued to be active acquirors over the last year or so and remain ready to pounce, according to Andrew Millington, corporate finance partner in the Midlands team of international accountants and business advisers Mazars.
Mr Millington said good assets would continue to come on to the mergers and acquisitions market in 2012.
“With fewer buyers around it remains a good time to buy.
“The myth that timing is everything is being eroded. In essence the consensus from recent studies is that savvy acquirers can create value through acquisition at any time in the cycle and pretty much anywhere.”
Mr Millington said major companies were maintaining cash piles at the ready.
“Internationally corporates large and small have, in the main, dealt with the difficult on-going recession and economic turmoil deftly. They have managed resources carefully and where necessary they have undertaken rationalisation and general housekeeping.
“A desire for growth remains a key driving ambition. The rationale for consolidation or a transformational acquisition in particular is not diminished.
“Struggling competitors are putting themselves on the market and a range of assets and once in a life time opportunities emerge in difficult times,” he said.
2011 had seen a reported three per cent rise in global M&A – $2.8 trillion involving 44,000 deals. And the UK was the most targeted nation in Europe.
It was becoming increasingly clear that the uncertain environment in the UK and international markets would continue for some time becoming “the new norm”, yet a range of recently published surveys had provided a cautiously optimistic outlook again for mergers and acquisitions in 2012.
Mr Millington said : “Corporates in the market are either cash rich or have substantial facilities on hand. In the last couple of years they may have dipped their toe in the market, often willing but waiting for greater certainty.
“While transformational deals remain a priority, together with targets in emerging markets that can provide stronger growth than domestic opportunities, if large is a concern then buyers are going plural. Predators are considering smaller deals and building up to scale in a structured and more measured approach over time.
“In addition we also see a desire to acquire minority stakes, buying a foothold in new markets or territories and enabling considered staged investments before making the headlong leap into a full acquisition or market entry.
“Active predators understand how best to use the current situation to their advantage in M&A. Typically we see this as a much more focused approach to selecting targets and pursuing opportunities, large or small. On any individual target a predator is typically undertaking far more research and in particular due diligence. This is beyond the normal financial due diligence and extends to markets, products, services, and management team dynamics.
“They are testing their assumptions on their plans and dedicating resources to the process from end to end. They are involving all levels of management and the board in acquisition strategy and operational matters from an early stage and have a clear integration plan where the focus is on implementation.
“This is probably one of the main reasons more acquisitions are regarded as a success than ever was the case. Acquirers are doing their homework and have learnt the lessons so often reported publicly of previous deal failures and are paying heed to lists of M&A success factors.”
