Frankfurt/Main – German companies aim to seize the opportunities presented by the current M&A market. Highly motivated M&A players consider even major acquisitions to be within reach again. That is the conclusion of the first survey of the FINANCE M&A panel, in which CMS Hasche Sigle and specialist magazine FINANCE polled some 80 investment bankers and M&A heads of major German companies. The companies are basing their takeover strategy primarily on their own funds. When the various finance options for acquisitions were ranked on a scale from 1 (not important for our M&A strategy) to 10 (very important), "own funds" came top at 8.68. Both banks and M&A bosses believe strategic buyers have a clear advantage in the M&A market over private equity firms.
Easier access to credit has further boosted financial firepower. Dr Thomas Meyding, partner at CMS Hasche Sigle, sees the survey results as confirmation that M&A is an integral part of growth strategies. "Due to the available cash and their competitive positioning, many companies are now in buy mode," says Meyding. CMS partner Dr Oliver Wolfgramm believes these results will be reflected in the M&A space: "Companies are relying on their own funds as the primary source of finance for corporate acquisitions. Together with the increasing willingness of banks to finance transactions, this points towards a substantial rise in M&A activity by German enterprises and large SMEs in the course of this year."
Major companies appear to be straining at the leash already. When asked whether they see themselves more as seller (rated 1) or buyer (rated 10), the company representatives on the panel positioned themselves clearly on the buyer side, with an average of 7.58. With more than a third of corporate M&A bosses answering the question with a straight 10 for their company, corporate growth ambitions are already resulting in increased competition for takeover targets according to the corporates surveyed. "The rise in M&A activity is also a reflection of increasing professionalism within companies," comments Thomas Meyding. "A lot of companies now have their own well-staffed M&A departments that closely monitor the relevant markets."
Both panel groups agree that differing price expectations are currently the most common deal breakers in M&A transactions, alongside negative due diligence findings that reveal target companies to be less attractive than hoped. "The divergence in price expectations between buyers and sellers is an after-effect of the financial and economic crisis," says Meyding: "Our observations fail to indicate any clear trend towards a buyer or seller market at present." Oliver Wolfgramm adds: "Price adjustment clauses can close the gap between different price expectations, but as our survey shows they are by no means a cure-all."
Those are the key findings of the spring survey of the M&A panel that CMS Hasche Sigle will now poll three times a year in conjunction with specialist magazine FINANCE.