ACG CEO Dan Varroney Affirms Record M&A Year

The media is increasingly turning to ACG for the proprietary content it is generating, and for commentary by ACG President and CEO Varroney and ACG board members. Varroney recently discussed the results of two ACG surveys on the hot global M&A environment in major media outlets, including CNBC’s “Worldwide Exchange” in London, and “Closing Bell with Maria Bartiromo.” Articles mentioning ACG have appeared in many of the leading broadcast outlets, publications, and wire services this year. In addition to the biannual ACG/Thomson DealMakers Surveys and the ACG/Dow Jones European DealMakers Survey, the association is conducting surveys with Grant Thornton on the convergence of private equity and hedge funds and Merrill Corp. on the growing use of virtual deal rooms. The results of these surveys will be announced in the fall. Bill Haynes of BackBay Communications and his team have been very successful in leading the media relations and survey efforts. The results of the mid-year ACG/Thomson Survey were announced at the National Press Club in Washington, D.C., where Varroney reviewed the survey findings and a panel of experts discussed the results. The panel consisted of Paul Stewart, PS Capital Partners; Jeri Harman, Allied Capital; Mark Jones, River Associates; Patrick Hurley, MidMarket Capital Advisors, and Lucy Reilly Fitch, BAE Systems. Survey Findings As worldwide mergers and acquisitions are on pace to break the year 2000’s record, dealmakers are again expressing great optimism, with 90% saying the current M&A environment is good or excellent. Lat May and June, the survey polled 1,201 investment bankers, private equity professionals, corporate executives, as well as lawyers, accountants, and other service providers involved in dealmaking. “What you’re seeing is the perfect M&A storm,” said Varroney. “Everyone has cash they want to put to work — private equity firms, companies, and even hedge funds. Time is a competitive advantage, and as companies see they can gain geographic reach and new complementary products and increase revenues and profitability by buying versus building, they seek acquisitions. The bankers are busy presenting all parties with compelling investment opportunities, and owners are getting good valuations for their businesses.” According to Thomson Financial, the total value of global M&A reached $1.613 trillion as of June 13. That sum represents a 41% increase over the same period last year, when $1.143 trillion worth of deals were completed. The 2006 number is also on pace to surpass 2005’s global M&A total of $2.769 trillion. In addition, private equity firms, which have been busy investing existing funds and raising new ones, are chasing larger deals, often teaming up in “club deals” to challenge strategic buyers. “Dealmakers are working at full throttle to take advantage of this market before inevitable volatility cuts into momentum. Buyers are well aware that there is little margin for error at today’s prices and sellers know this is a great time to get out,” said Hurley, Chairman of ACG. Hot M&A Sectors Dealmakers see the following sectors experiencing the most merger activity in the second half of 2006: * Technology (27%) * Health care and life sciences (18%) * Manufacturing and distribution (17%) Cross-Border M&A Nearly half (49%) of dealmakers polled expect to be involved in an international cross-border deal during the second half of 2006, and 43% say cross-border deals are becoming more important to their firms. Geographically, they anticipate these deals will be in: * Western Europe (46%) * China (37%) * Canada (31%) Private Equity Private equity professionals say the deal size and type that hold the most promise are: * Mid-market buyouts (33%) * Small buyouts (27%) * Early-stage VC (18%) * Later-stage VC (11%) Geographically, the areas with the greatest potential for private equity investments are: * United States (44%) * China (18%) * India (9%) * Western Europe (7%) * Eastern Europe (7%) (c) 2006 Mergers and Acquisitions Journal and SourceMedia, Inc. All Rights Reserved. http://www.majournal.com http://www.sourcemedia.com