M&A’s rise from the dead

The lifeless husk that was the corporate finance arena is showing signs of returning from the dead.

The profession did what it had to when corporate finance expired after the credit crunch. Departments disappeared; staff were shifted into business recovery and tax to keep them busy, while more experienced partners were politely asked to “retire” a little earlier than expected.

More than 3,000 professional staff were lost from the Top 50 firms in the past year, a 5% drop.

But in our special feature on the return of corporate finance, the industry’s experts believe that deals are re-emerging - albeit tentatively - with firms revved up to begin work.

“We are seeing signs that M&A activity will pick up, including a number of listed British firms that are currently raising cash, not just to repair their balance sheets, but to prepare for acquisitions in the coming months,” said Grant Thornton’s head of M&A David Brooks.

“If engaging transactions advisers is a gauge of life, our own pipeline suggests the M&A market may be coming out of its coma,” according to John Kelly, the newly-appointed head of transaction services at KPMG. The deals that are being struck are taken more seriously and better planned than in the past, he added.

“The landscape is very different this time around, however, with deals being approached from another angle... with vendors and buyers working in a more constructive manner to get the deal done, often tapping into synergies and future value increases.”

The firms’ cautious optimism is backed up by the business community. This week, Deloitte’s CFO survey found that while just 14% expect a return to normal or trend rates of growth in their markets in 2010, 92% of CFOs think M&A will rise over the next year, with 39% contemplating making corporate acquisitions during that period.

Further reading:

Dawn of the deal

Signs of hope but don’t rush back to transactions