KPMG: World M&A activity to plateau in 2008
Date: 21-01-2008
Source: Reuters News - New Zealand
Global merger and acquisition activity will likely plateau in 2008 as deals in emerging markets help offset a decline in transactions in Europe and North America, KPMG Corporate Finance said on Monday.
Global forward price/earnings ratios have slipped from 17.1 times to 17 times, declining in Europe and the United States but rising in the Asia Pacific region, the audit, tax and advisory firm said in a statement.
"This leaves us with a real mixed outlook. Where there is appetite and confidence, there are constraints such as a lack of funds or suitable targets," said KPMG's International Chairman of Corporate Finance Stephen Barrett. "Where there is cash, there is nervousness, caution and a slight loss of appetite."
Despite a second-half slowdown, overall 2007 was the second consecutive record year for M&A as consolidation in the financial services and natural resources sectors and a flurry of private equity deals boosted volumes.
Forward price/earnings in Europe declined to 15.5 times from 16.2 times and slipped to 17.4 times from 17.9 times in North America. In the Asia Pacific region, they rose to 19 times from 17 times, KPMG's data found.
Asia Pacific, along with Africa and the Middle East also showed the strongest balance sheets. Globally, the ratio for net debt to earnings before interest, tax, depreciation and amortisation stood at 0.81 times.
Basic materials, telecoms and industrials are likely to see the most merger and acquisition activity in the world as price/earnings ratios for the sectors all rose, KPMG said. It saw the weakest industries on this basis as consumers services and healthcare.
.jpg)
