Fried Frank and mergermarket Release <em>Market Makers </em>Survey of M&A, Corporate and Private Equity Executives

Fried Frank and mergermarket Release Market Makers Survey of M&A, Corporate and Private Equity Executives

Pace of Strategic M&A and LBOs to Continue, Claims Market Makers Survey of M&A, Private Equity and Corporate Executives

  • Debt market expected to sustain mega-buyouts
  • SBOs will continue to be most popular exit route
  • Shareholder activism and hedge funds contributing to ongoing boom

New York, May 16, 2007 – mergermarket, the M&A intelligence and research service, is pleased to announce the findings of its annual Market Makers survey.  The study, published in conjunction with Fried, Frank, Harris, Shriver & Jacobson LLP, is the result of 150 interviews with prominent private equity professionals, M&A bankers, and corporate CEOs in both the US and Europe, designed to gauge expectations and opinions on the leading issues facing the M&A and private equity industries. 

The survey yielded several surprising findings.  While the availability of cheap debt is regularly cited as a contributing factor in the ongoing private equity boom, only 3% of respondents consider such availability a "principle driver" of mega-buyouts.  Other trends, such as the popularity of consortium bids and the opportunity for superior returns compared to smaller companies, were considered more influential drivers.  Respondents thus are likely to expect continued mega-buyout activity regardless of any turn in the credit cycle. 

Furthermore, respondents clearly favor secondary buyouts as the exit strategy of choice for today's LBOs, contrasting with the popular notion that a strategic sale or IPO exit signals a "successful" buyout.

Additional findings from the survey include the following:

  • 56% of respondents expect large cap strategic M&A activity to continue to increase in 2007

  • Nearly 50% of respondents see shareholder activism as a catalyst for M&A activity
  • Respondents believe hedge funds are increasing the competition for M&A targets
  • 70% of respondents claim the debt market is expected to sustain leveraged buyouts in 2007, and 73% of respondents do not anticipate major defaults by private equity portfolio companies in 2007
  • Respondents expect Energy and Financial Services industries to be the leading sectors for large transformational M&A in 2007; Healthcare, Business Services, and Energy are expected to be the most attractive sectors for LBOs
  • Respondents believe the increased use of consortium/club deals is the leading concern for private equity fund Limited Partners

The report, available at, also includes feature articles on the continued momentum of strategic M&A; the drivers behind the current LBO boom; and the development of mega-funds in private equity.

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