Fueled by Excess Capital, M&A Activity to Rise in 2014

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The mergers and acquisitions market in the United States will be stronger in 2014, according to a survey released Wednesday by Dykema, a Detroit-based law firm.

“The business community is feeling better and is confident that it will be involved in an acquisition next year,” says Jeff Dalebroux, director of Dykema’s business services department. “This increased confidence is undoubtedly connected with lower rates, availability of capital, and an overall positive outlook for the economy moving forward.”

The annual survey conducted by Dykema revealed that 68 percent of respondents — which included leading company executives and outside advisers — predict the number of mergers and acquisitions will increase in the next year. The result is dramatically different from last year’s survey, which indicated that only 37 percent of respondents predicted a stronger M&A market. 

“As the nation continues to recover and rebound financially, the business community appears to be more optimistic about their investment options and the U.S. economy this year,” says Dave Cellitti, a corporate finance attorney that leads Dykema’s M&A practice. “Excess capital would seem to be one main reason for this surge in optimism; however, executives are still cautious as they continue to make decisions in a turbulent economic environment.”

This year, 70 percent of respondents anticipated that they would be involved in an acquisition, as opposed to 53 percent last year. For the sixth straight year, the majority of the survey’s respondents (57 percent) said they expect strategic U.S. buyers to increase their presence in the market.

When rating the most common obstacles experienced in deals within the past 12 months, uncertainly in the economy ranked No. 1. However, the survey also found that 50 percent of respondents have a positive outlook for the U.S. economy over the next 12 months; in comparison, only 25 percent of respondents felt that way last year.

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