A new report from KPMG International suggests that a global recovery in M&A activity in the food, beverage, consumer goods and retail sectors slowed in the second half of 2011. Findings suggest that macroeconomic forces, such as euro zone instability and challenges in arranging financing, were the main contributors.
Fundamental drivers for growth, however, remain in place in most countries and companies are preparing to come back strongly when confidence returns in 2012 and 2013.
The report suggests that debt financing remains difficult for deals over US$130m. However, the availability of financing for mid-range companies with strong customer bases is still generally good. “Most activity is currently taking place in the middle market, largely because debt financing is more readily available for smaller transactions,” said David Simpson of KPMG in the UK. Pockets of M&A activity are also occurring in markets largely unaffected by the euro zone crisis, such as Mexico, Poland and South Africa. Mexico’s food and drink sector was the most active consumer sector for M&A in 2011.
Also highlighted in the report is that lender scrutiny is generally tightening. Banks are requiring a greater amount of due diligence than would have been seen three or four years ago. Current market conditions are also increasing the level of competition amongst lenders for companies pursuing attractive deals. “Lenders are saying the competition today is as heavy, if not heavier, than it was in the pre-crisis days,” says Jonathan Farnell, a Transaction Services Partner at KPMG in Norway. Those companies competing for financing or buyers need an online solution that gives them an efficient way to organize and securely share confidential information critical to getting deals done.
Virtual data rooms provide a secure online document repository to share, control and track confidential information for comprehensive online due diligence. Firmex allows you to cost effectively set up an unlimited number of private branded deal rooms ahead of time, so you are ready to quickly share mission-critical information as the deal evolves.