Global merger and acquisition (M&A) activity is likely plateau in 2008 as
deals in emerging markets offset a decline in transactions in Europe and North
America over the next six to 12 months, according to the latest version of
Global M&A Predictor.
The Predictor indicates 2008 deal levels may hold steady compared to 2007 but
deal values will decline, yet the capacity for ‘intelligent’ deals remains as
corporate balance sheets look strong.
The Predictor indicates a clear split in appetite for deals as the mature
regions of Europe and North America show a declining valuation trend of price
earning (PE) ratios, dropping from 16.2 times to 15.5 times and 17.9 times to
17.4 times, respectively; while the emerging regions such as Africa-Middle East
and Asia Pacific showed increased valuations of PE ratios – up from 13.7 times
to 15.5 times and 17.0 times to 19.0 times, respectively.
‘Where there is appetite and confidence, there are constraints such as a lack
of funds or suitable targets,’ Stephen Barrett, KPMG international chairman of
corporate finance, said. ‘Where there is cash, there is nervousness, caution and
a slight loss of appetite.’
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