Merger and Acquisition Trends, Global Trends for Merger and Acquisition

Trend essentially refers to the observed long-term movement in a time series data. Trend estimates are seasonally adjusted through an averaging process. Merger and acquisition trends provide an idea about the market movements.

Merger and acquisition trends are seen to affect an economy’s product market, money market, and labor market. Global markets are also considerably influenced by the merger and acquisition trends.

Trend essentially refers to the observed long-term movement in a time series data. Trend estimates are seasonally adjusted through an averaging process. Merger and acquisition trends provide an idea about the market movements.

Merger and acquisition trends are seen to affect an economy’s product market, money market, and labor market. Global markets are also considerably influenced by the merger and acquisition trends.

Global Merger and Acquisition Trends for 2006 and 2007

2007 and 2006 were marked by a spate of mergers and acquisitions all over the globe in both developing and developed countries. The general trend was that, there was a decline in the number of public sector undertakings along with a hike in the number of private sector enterprises. This was due to the fact that many public sector organizations worldwide were either acquired by large private sector enterprises or merged with them.

The explanation to this merger and acquisition trend as observed in 2006 and 2007 lay in the robust growth recorded by the Private Equity Funds. The other factors propelling this trend were the emphasis on short term earnings growth and the strict regulatory structure of public sector enterprises.

This merger and acquisition trend towards increased privatization of public sector holdings was observed in Europe, Brazil, North America, and China. Europe in that period hosted a strong investment market, which catered to the public to private sector transition of companies.

For China mergers and acquisitions from public to private business enterprises got government approval in 2006.

More on Private Equity Driven International Merger and Acquisition Trends

Private equity transactions had been the buzzword for the world economy in 2007 and 2006. The real estate sector and the energy sector witnessed much of this type of activity. Private equity firms were working overnight for augmenting proprietary deal flows.

China was an unique case in point. There the powerful trend towards mergers and acquisitions involving private equity dealings comprised a lot of policy and regional diversity. A great amount of equity capital flowed into China from US, Japan, Israel, and Europe as retail sector investments. This was primarily aimed at tapping China’s heightened domestic consumer demand. Focus shifted to the northern and western regions of China as costs escalated for the commercial hubs alongside the eastern seacoast.

In the US, private equity funds succeeded in raising more than $200 billion in this period for international merger and acquisition dealings.

As these types of funds usually possessed a time frame of 3 to 5 years for putting the new invested capital to work, they were expected by the analysts to power heightened merger and acquisition activities across major global markets for the coming decade.

For Europe the general prediction was that of a high transactional demand related to private equity.Analysts observed that certain European markets were characterized by different financial advantages and tax structures. Western European nations possessed well oiled legal machinery and conducive investment climates. In particular Britain exhibited a strong market for public to private investments.

After the accession of nations like Poland, Czech Republic and Hungary into the EU, a section of European funds for private equity were seen to be abstaining from applying the ’emerging market discount’ for investment in those nations.

Equity investment in Brazil turned attractive with the program called Novo Mercado. Brazilian pension funds turned out to be a prime investment force. Their bankruptcy code got a revision. The elected government was supportive of a free market structure.

In North America domestic dealings in M&A executed by private equity investors of USA displayed a robust international component. The observed trend was that a majority of the funds wanted to secure offshore partners for distribution, contract manufacturing or joint ventures.

This kind of cross-border transactions entailed a careful planning for tax obligations arising out of fund repatriation.

More on Merger and Acquisition Trends

Global leveraged buyouts figures for 2006 were above US$ 800 billion. This was more than twice the comparable figure for 2005. It constituted around 20 % of US international mergers and acquisitions. However, even then it was not a significant component of the world equity and debt market.

In 2006 North America saw vigorous leveraged buyout activities, which amounted to half of the world activity in that field. Europe witnessed a fairly heightened activity in the arena of leveraged buyouts; while Asia had a relatively slow increase. France, Netherlands, and Germany were the biggest European buyout markets in 2006.

No doubt that private equity has indeed become a major component of twenty-first century’s capital market.