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2009
MARKETPLACE SURVEY
A LOOK AT THE FINANCIAL LANDSCAPE IN THE YEAR TO COME
Spring 2009
2 T H E D E A L
2009 Marketplace Survey
2
◆
CONTENTS
Challenges Continue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 3
Key Survey Data and Findings . . . . . . . . . . . . . . . . . . . . . . . . . p. 7-8
EXPERT VOICES
James Burr, Managing Director,
The Carlyle Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 9
Richard Bates, VP, M&A, Duke Energy Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 10
Jim Rossman, Senior Managing Director, Macquarie Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 11
LAST YEAR was a challenging one for dealmakersand one with some unexpected outcomes. While many dealmakers expected slowing GDP growth rates and a difficult credit environment to limit M&A activity, few predicted the massive federal government investments or the shake up in the investment banking community. In the United States, fourth-quarter deal volume dropped 53 percent from a year earlier. For the entire year, global deal volume fell 29 percent to $3.06 trillion. Govern-ment activity accounted for a record 5.5 percent of U.S. deal volume. In addition to investments funded by the U.S. Treasury’s Troubled Asset Relief Program (TARP), sovereign wealth funds also made large investments in U.S. banking institutions.
The credit environment created major obstacles for dealmakers, and the debt markets saw several unprec-edented examples of illiquidity. For example, the short term LIBOR rate, which usually is 0.1 to 0.15 percent above the federal funds rate, was at 3.22 percent above the federal funds rate in October (it has since moderated). Private equity (PE) funds were particularly challenged by the credit markets, and last year PE-led buyouts ac-counted for only 6 percent of deal volume, compared to 15 percent in 2007. In addition to financing issues, public company acquirers were challenged with declining stock prices, record breaking volatility and falling revenues.
Several high-profile deals fell apart last year and there
were over $323 billion in deals that were withdrawn. The ratio of withdrawn deals to completed transactions reached a record 28.8 percent.
Although most dealmakers are cautious, there are some potential bright spots on the horizon. Even with the constraints of last year, several large global mergers were completed, such as InBev’s $52 billion purchase of Anheuser-Busch and Verizon Wireless’ $28.1 billion acquisition of Alltel Corp. Despite the drop in activity, global deal volume in 2008 was on par with deal volume in 2005, which was still healthy by historical standards. In addition, some markets actually saw an increase in M&A activity. In spite of a decline in its stock market, China’s M&A activity increased 44 percent in 2008 to reach an all time high of $159 billion.
Governments around the globe have committed to massive stimulus packages that are intended to increase lending and economic growth, which may stimulate M&A activity. The United States, United Kingdom and Germany have already infused a large amount of capital into their respective banking sectors. Those governments and numerous others, ranging from Taiwan to Dubai, have all committed to hefty investments in infrastructure and industry that could help to get the world’s economies back on track. In addition, there are some positive signs on the credit front. In the first six weeks of 2009, U.S. companies sold $78.3 billion in investment grade corpo-
CHALLENGES CONTINUE
M&A Prospects for the Next Twelve Monthsby Sherrie Nachman
41 PERCENT INTEND TO COMPLETE ONE TO TWO ACQUISITIONS THIS YEAR AND 15 PERCENT PLANTO COMPLETE THREE TO FOUR ACQUISITIONS.
3
rate bonds that were not guaranteed through a govern-ment program.
While not all the news was good, last year’s economic landscape created unusual circumstances that will likely result in a changed marketplace going forward. What do M&A practitioners think the deal world will look like in the next 12 to 18 months? The Deal and KPMG LLP conducted a survey of 270 M&A professionals to find out. Public companies, private companies and PE funds were represented. This survey resulted in numerous inter-esting insights, which we discuss in detail below.
M&A DEAL VOLUME IS DOWN, BUT NOT OUTWhile approximately one-third of the respondents in our survey engaged in no M&A activity at all in 2008, another one-third completed one or two deals. The remainder were extremely active: 14 percent completed three-to-four deals; 12 percent completed five to 10 deals and 7 percent completed more than ten deals. How did those numbers compare to 2007? About 31 percent saw their deal volume increase, 38 percent saw their deal volume decrease, and 31 percent saw their deal volume stay the same. Perhaps it is not surprising that the vast majority of these deals were relatively small in size. In the survey, 79 percent of participants said that the average value of their 2008 deals was $250 million or less. Just 1 percent of respondents said that their deals involved valuations over $5 billion.
The struggling economy also affected the types of transactions completed. Almost 60 percent said they completed divestitures in 2008 and 44 percent said that the number of divestitures they completed increased between 2007 and 2008.
Participants in the survey plan to be slightly more active in the 2009 M&A market. In fact, 41 percent said that they intended to complete one-to-two acquisi-tions this year and 15 percent said that they planned to complete three to four acquisitions. Of the PE respon-dents, 50 percent said they were planning on completing one-to-two deals in 2009. However, one-quarter of all respondents said they were not planning on completing any acquisitions in 2009. As was true in 2008, deal values in 2009 are expected to remain relatively small in size. Approximately 80 percent of respondents said that the enterprise value of their acquisitions would be $250 mil-lion or less. Only 2 percent expected the enterprise value of their acquisitions to exceed $5 billion this year.
Alan Hartman, Head of Americas, M&A at Bank of America Merrill Lynch, said those findings are consistent with what he sees in the pipeline. He said that a percent-age of the market is balance sheet constrained or belongs to industries where earnings projections are almost
impossible to make, such as real estate and retail. Those businesses are not likely to pursue any deals. Hartman said, “On the other side, there are many well-capitalized, large companies in the pharmaceutical or media indus-tries that are seeing today’s environment as a buying opportunity. Companies that are not able to get the next round of financing are selling at a discount and we are seeing many private company acquisitions valued between $250 million and $500 million.” Lastly, there are a group of companies that need to execute M&A transactions to keep growing. If they can do deals without negatively affecting their credit or overly diluting their sharehold-ers, they should get market support, since in the current environment there really is no negative stigma around deals, he adds.
KPMG’s Dan Tiemann, National Operations Leader, Transaction Services, said that he anticipates the trend of small acquisitions continuing in the next 12-to-18 months. “Financing is obviously easier to arrange on smaller deals,” he said. “In addition, acquirers with healthy balance sheets have the potential to make some strategic investments at good values. ”
What types of businesses are dealmakers looking at? In the survey, 53 percent of respondents said that they are currently in the market for distressed businesses or assets, and 12 percent said they would be potential sellers of a distressed business or asset. Robert Profusek, global head of M&A at the law firm of Jones Day, believes that based on financial history, M&A activity should pick up this year, particularly in the distressed sector. “It already appears that distressed investing will be one of the more active segments of the market in 2009,” he said. “We can expect to see more buyouts of companies in the bankruptcy process, especially companies with strong underlying brands that have unsustainable debt or are in a depressed industry.”
Perhaps it is not surprising that some of the hard-est hit industries may see consolidation. When asked which three industries would be most active in 2009, 55 percent chose banking, 36 percent chose the financial sector and 23 percent chose automotive. Energy (19 percent), healthcare (18 percent) and retail (18 percent) were also ranked as popular industries for M&A activity. According to KPMG’s Drew Koecher, National Services Leader, Restructuring Services, the industries that have been suffering the most, including the financial, automo-tive and energy sectors, are also those that are undergo-ing major structural changes. “Government investment, regulatory changes and restructurings in certain sectors will probably result in continued consolidation, which should produce opportunities for M&A,” said Koecher.
The current environment also means that divestitures
2009 Marketplace Survey
4
may make up a larger percentage of deals. While over half of those surveyed said they did not plan to complete any divestitures this year, one-third said that they plan one or two divestitures and 9 percent said they plan to complete three or four divestitures. The enterprise value of the divestitures was also expected to be relatively small and 79 percent said that they expected the average enterprise value of a divestiture in 2009 to be less than $250 million.
When asked for the two main reasons for completing a divestiture in 2009, most participants said that they are primarily motivated by a change in strategic focus (48 percent) or by a desire to raise cash or improve liquidity (33 percent). Respondents also were motivated by opportunistic deals (24 percent) and the desire to downsize in response to market conditions (19 percent). According to KPMG’s Tiemann, the current economic situation is forcing both public and private companies to look very carefully at their business models. In his view, “It makes sense that in today’s environment, companies will attempt to sell ancillary businesses that are expen-sive to support, add little to the bottom line or do not fit within a company’s core competencies.”
Quality of earnings is particularly important in the current environment. When survey participants were asked what factors most impacted an acquirer’s assess-ment of earnings, 81 percent said a slowing growth environment, 37 percent said earnings dilution, and 30 percent said commodity price volatility and exposure.
THE CREDIT MARKETS CONTINUE TO IMPEDE DEALSThe deal environment was challenging in 2008 and, de-spite government action, many respondents expect that completing a deal in 2009 will remain difficult. About 46 percent of respondents said that they aborted one to three deals in 2008. When asked what they perceived to be the single factor making it difficult to complete deals in 2009, 52 percent said it was the availability of debt financing. Among PE respondents, 65 percent blamed
debt financing. In the survey, 21 percent believed that generally negative market conditions were to blame and 16 percent said disputes concerning valuations were making deals difficult to complete. KPMG’s Shawn Hessing, National Managing Partner, U.S. Private Equity Group, said that those factors are having a major effect on PE firms. “Today’s credit markets are mak-ing the large LBOs of just two years ago seem almost impossible to recreate,” he said. “In addition, companies whose stock prices have fallen significantly are reluctant to sell since they believe that even with a premium, they are still extremely undervalued.”
How is today’s difficult market actually affecting deal volume and deal structures? Half of the survey participants said that the current market turmoil is causing them to reduce the number of deals that they would normally pursue. In reaction to the market, 45 percent said that their company or firm was financing more deals with available cash, 15 percent said that they were putting in more equity and 11 percent said that they were increasing the use of deferred or contingent payout structures. KPMG’s Koecher said that he expects to see acquirers continue to be more conservative and over capitalize deals to guard against potential future performance downturns. “We are seeing leverage ratios continue to fall and the use of junior debt capital has all but vanished in many deal structures.”
Beyond the general economic downturn and declin-ing revenues, the majority of respondents (56 percent) said that the primary contributor to a distressed busi-ness was too much debt. In addition, 41 percent blamed mismanagement and 33 percent said that they thought the main problem was inability to maintain or renegoti-ate existing credit lines.
THE PRIVATE EQUITY FACTORThe percentage of PE deals soared as the M&A boom peaked in 2007. However, PE’s reliance on debt financ-ing significantly reduced financial sponsor activity last year. Projecting into 2009, 50 percent of respondents ex-
“TODAY’S CREDIT MARKETS ARE MAKING THE LARGE LBOS OF JUST TWO YEARS AGO SEEM ALMOST IMPOSSIBLE TO RECREATE.”
5
pect PE M&A activity to decrease, while 23 percent be-lieve it will increase and 27 percent think that it will stay the same. PE respondents were generally more pessimistic and 62 percent said they expected PE activity to decrease. KPMG’s Hessing notes that “once the economy rebounds, PE firms are likely to return quickly to the M&A scene since they are sitting on large amounts of uninvested capital and are eager to pursue profitable investments.” Steven Kaplan, the Neubauer Family Professor of En-trepreneurship and Finance at the University of Chicago Booth School of Business, said that PE firms are currently waiting for some type of economic stability that will make cash flow forecasts more reliable. He also believes that PE investors may become active as more companies need to refinance debt and will be looking for equity investors to help them. “Those opportunities are attractive to PE firms because they can put in some equity and still take advan-tage of the existing leverage,” he said.
Recently, some PE portfolio companies have been in the headlines because they filed for bankruptcy protec-tion. Asked how this might affect PE deals in the future, 69 percent said that they thought leverage amounts would be decreasing; 92 percent of PE respondents expected leverage amounts to go down. About 17 percent expected government regulation to increase, but 10 percent did not believe there would be any long-term effect.
THE EFFECT OF GOVERNMENT INTERVENTION IS STILL UNCLEARHow do M&A professionals feel about the Federal gov-ernment foray into the banking sector? About 19 percent thought that it would have a positive effect on M&A, while 16 percent thought the effect would be negative. The remainder thought that the effect would not be
significant or that it was too soon to tell. How will the federal government’s investment in a particular segment affect the attractiveness of that sector for dealmakers? The effect would be negative, according to 27 percent of participants, while 24 percent thought that the invest-ment would be a positive stimulus. KPMG’s Greg Falk, National Leader of M&A Tax, said that increased invest-ment by the government could be a positive, especially if those companies that received aid are able to turn them-selves around and pay off the government’s investment in a relatively short amount of time.
In general, 19 percent of respondents said that they thought the economic policies of the Obama adminis-tration would have a positive effect on M&A, while 23 percent thought that the effect would be negative. “While it is impossible to know how all of the new administra-tion’s policies will play out, any moves that help stabilize the economy and increase lending should have a positive effect on M&A,” said Falk.
CONCLUSIONWhile no one expects M&A to be extremely strong in the next 12 months, a significant percentage of respon-dents do expect to be active deal makers. Certainly, it appears that they will be pursuing different types of deals. Smaller deals, divestitures and those involving distressed assets may become prevalent until the credit markets recuperate. Companies in certain troubled industries may be particularly popular consolidation targets. Once the credit markets become more liquid, it is likely that M&A investors, especially PE funds, will start to become active again. However, debt levels may be lower this time around and creative pay-out structures may become more popular. ◆
“WHILE IT IS IMPOSSIBLE TO KNOW HOW ALL OF THE NEW ADMINISTRATION’S POLICIES WILL PLAY OUT, ANY MOVES THAT HELP STABILIZE THE ECONOMY AND INCREASE LENDING SHOULD HAVE A POSITIVE EFFECT ON M&A.”
2009 Marketplace Survey
6
10
0
20
30
40
50%Banking
FinancialServices
AutomotiveEnergy Healthcare Retail Pharmaceuticals
InformationTechnology
RealEstate
IndustrialProducts Insurance Media
10
0 0
0 0
20
30
40
50
60%
10
20
30
40
50
60
70
80%
10
20
30
40
50
60
70
80%
10
20
30
40
50
60%
In 2009, what industries do you think will bethe three most active in mergers and acquisitions?
Do you expect the amount of financial sponsor M&A activity to:
Approximately how many acquisitions do you anticipate your own organization will complete during 2009?
Approximately how many divestitures do you anticipate your own organization will complete during 2009?
What do you anticipate your average enterprise value per acquisition will be in 2009?
Greaterthan
$5 bill.
$1 bill.to $5 bill.
$500 mill.to $1 bill.
$250 mill.to $500 mill.
Less than$250 mill.
778
1414
1719 1818
23
36
55
23
50
27
80
13
52 2
52
33
49
2
25
41
1513
5
None 1 to 2 3 to 4 5 to 10 Morethan 10
None
1 to 2
3 to 45 to 10
Morethan 10
Stay the sameDecrease Increase
Source: KPMG LLP and The Deal LLC Annual M&A Survey, 2009Source: KPMG LLP and The Deal LLC Annual M&A Survey, 2009
Key Survey Data and Findings
7
2009 Marketplace Survey
0
10
20
30
40
50
60
70
80%
Greater than$5 bill.
$1 bill.to $5 bill.
$500 mill.to $1 bill.
$250 mill.to $500 mill.
Less than$250 mill.
0
10
20
30
40%
Reduce the numberof deals
Finance deals withavailable cash
Increase in deferred/contingent pay out structures
Use higher ratio of equityversus debt financing
Increase thenumberof deals
Other
0
0 0
10
20
30
40
50%
Availability of debt financing
General negative market conditions
Disputes concerning valuations
Burdensome debt terms
High borrowing costsLarge declines in stock prices(to be used as currency)
The relative strengthof the dollar
Other
10
20
30
40
50%
10
20
30
40
50%Too soonto tell
There will not bea significant effect
The effect willbe negative
The effect willbe positive
Too soonto tell
There will not bea significant effect
The effect willbe negative
The effect willbe positive
79
13
6 2 0
16
7
2629
31
43
51
1917
44 3 <1 1
1916
19
46
2427
12
37
What do you anticipate your average enterprise value per divestiture will be in 2009?
What single factor do you believe will make it hardest for deals to be completed in 2009?
How will your company/firm react to thecurrent market turmoil in 2009?
How will the federal government’s investment in the banking sector affect the M&A environment?
How will the federal government’sinvestment in various industries/sectors affect the attractiveness of that industry/ sector for other acquirers?
Source: KPMG LLP and The Deal LLC Annual M&A Survey, 2009
Key Survey Data and Findings
8
James Burr is a Managing Director in the Global Financial
Services Group at The Carlyle Group.
Private equity investments are projected to continue to be
slow in 2009, but one of the most active areas for M&A
is expected to be the beleaguered financial services sector.
Carlyle’s James Burr has a unique perspective as a PE
investor looking for profitable opportunities.
Q: What is the general mood in the PE community at
the moment?
In general, the mood in the PE community is very cau-
tious. The historical PE model is based partly on the
ability to leverage the investment. With the current lack
of lending available, most traditional PE investments do
not make sufficient returns at current equity prices. To
achieve acceptable returns, equity prices will have to fall
further given the current lack of liquidity in order for an
equity deal to make sense. Equity values have to come in
line with today’s new world, which I would define as large
drops in GDP, earnings power and leverage. I think that
it will be a very long process before the requisite M&A
fundamentals return.
Q: Are there any opportunities for PE investors in the
financial sector?
Last year, the Federal Reserve eased restrictions on
minority owners of banks, including ownership by PE
funds. Under the new rules, investors can own a larger
percentage of stock without falling under the definition
of a “bank holding company.” That move did provide PE
firms with an added incentive to explore the banking
sector. In addition, Financial Institutions Group deals
can be appealing because the business model is inherently
leveraged, thus minimizing the need for any “acquisition”
leverage. With that said, banks are obviously at the epi-
center of the current economic crisis and finding quality
franchises that can weather the storm is challenging.
Q: What are you looking for when you evaluate a bank-
ing opportunity?
Last July, Carlyle made a $75 million investment in
Boston Private, a national financial services organization.
That deal is emblematic of the type of banking deals that
we are interested in pursuing. The investment made sense
because Carlyle was given the opportunity to conduct suf-
ficient due diligence and was able to
understand the company’s assets, li-
abilities and risks. We don’t do deals
where we only have a weekend to do
due diligence. Also, Boston Private
was receptive to certain steps that
Carlyle requested, such as raising
additional capital and cutting its
dividend.
Q: How does the federal government’s investment in
the financial sector affect your investment thesis?
The government’s investment in the banking sector does
not change our perspective, in fact, in many ways we
encourage it. However, it would be very helpful to the
investing community if the federal government would
begin to develop and articulate a consistent set of rules
for this sector. The uncertainty makes private capital,
PE or otherwise, understandably cautious and has the
unwanted side effect of driving up the cost of capital for
issuers because they have to pay for that added risk of
uncertainty. ◆
EXPERT VOICES
A PE perspective on the Financial Services Industry Q&A
9
Richard Bates, vice president, mergers and acquisitions,
Duke Energy Corporation, sees opportunities for alterna-
tive energy-related deals. Although he believes the energy
sector is ripe for consolidation, Bates believes that market
uncertainties may limit deals this year.
Q. Where do you predict we’ll see activity in the energy
sector this year?
Renewable energy, especially wind power, is one of the
fastest growing generation sources. Last year, Duke
purchased Catamount Energy Corp., a wind farm develop-
er, as part of our strategy to increase our renewable energy
resources.
In keeping with that strategy, we also are expanding into
biopower with a joint venture with the French energy
company AREVA to develop biomass plants that will use
wood waste to produce electricity. AREVA will design
and build the plants and Duke Energy will operate and
manage them.
Renewables are being supported by the new U.S. admin-
istration through tax credits and grants to advance our
nation’s global competitiveness in this area. There is a
perception that we’re behind the Europeans in terms of
renewable energy, but I believe we can catch up with ap-
propriate levels of government support.
Q. Will European companies be active in acquiring U.S.
energy companies?
European energy companies have shown interest in acquir-
ing U.S. alternative energy companies, especially those
involved in wind power. For example, in 2007, EDP-
Energias de Portugal SA paid $2.2 billion for Horizon
Wind Energy LLC. Iberdrola, Enel and E.ON also are
active in renewables in the U.S. At year end, GDF SUEZ
Energy North America, part of the global GDF SUEZ
company, acquired FirstLight Power from Energy Capital
Partners, which has more traditional plants. EDF recently
agreed to acquire a significant stake in Constellation En-
ergy’s nuclear plants. These European companies are large
and they are interested in expanding.
However, I think European companies have a limited
amount of interest in buying regulated energy businesses
in the U.S. Our regulatory environment, with its multiple
layers of government involvement,
is not that appealing to European
companies who operate primarily
with only national regulation.
Q. Will the search for new energy
technologies drive the market?
I think it will be more about corpo-
rate strategy. We will continue to
have both regulated and unregulated
markets in the United States for the foreseeable future. So,
companies will want to have the right mix of both types of
businesses in order to navigate their way.
Historically, the oil and gas part of the industry has seen
consolidation during times of falling commodities prices,
such as we have now. In the electricity and natural gas
space, which is where Duke Energy exists, it’s a frag-
mented business that, in our opinion, needs consolidation
to improve efficiencies. After all, Duke Energy itself is the
product of a merger in 2006 of two century-old companies.
But, it will likely take time for these consolidations to oc-
cur in this market. However, when the stars align, I think
we’ll see some interesting developments.
Q. What type of deal activity or investment is Duke
Energy looking for right now?
Duke Energy will potentially spend nearly $25 billion over
the next five years to modernize our regulated operations
and grow our commercial businesses. Most of that will be
spent on our regulated businesses.
However, we do have the potential to invest over
$4 billion dollars of discretionary growth capital in
our commercial businesses over the next five years,
provided the projects meet our return expectations. This
segment currently represents about 25 percent of our
adjusted segment Ebit. These businesses consist of our
power generation services, our renewables and our power
business in Latin America.
There is room for deal activity in these areas. We definitely
see possibilities for joint ventures that will help us to extend
our reach in these three subsectors of our business. The cur-
rent market uncertainty makes it difficult to predict
exactly what types of deals we will ultimately pursue or
when we would pursue them, but we are always looking. ◆
EXPERT VOICES
In Energy, the Money will be on Green Q&A
2009 Marketplace Survey
10
Jim Rossman, Senior Managing Director and head of U.S.
equity capital markets, Macquarie Capital, predicts that
the market’s focus will be on restructurings in all sectors and
that infrastructure-related deals will be winners.
Q. How would you characterize the M&A market right
now?
The market is directionless. It’s our biggest challenge.
If you could see something coming, you could plan for
it. But, that’s not the case. We’ve been through so much
negativity that people are saying, “We don’t know if the
deal can be done.” Investors are particularly wary about
unrealistic price expectations, balance sheets that need to
be de-leveraged, and financing and regulatory risk.
Q. What areas of the M&A market do you think will be
most active in the near term?
Restructuring will be prevalent in many sectors, including
retail, real estate, technology, auto and anything linked to
consumer spending.
The recent carve-out by Bristol-Myers Squibb of its
Mead Johnson division is an example. When you’re com-
ing from a period of losses, investors want to minimize
risk. As a result, successful IPOs are coming from siz-
able companies with established track records that offer
investors solid data with which to make good decisions.
We saw increased spin-offs and carve-outs in 2002-2003
following the tech bust, and I think the Mead deal is a
harbinger of this trend’s return.
Later in 2009 and into 2010, I think we’ll see recapital-
izations. There is a lot of talk about REITs, brokerages
and banks raising money to avoid government involve-
ment. At Macquarie, we’re preparing for a ramp up in
recaps. Australia, where our bank is based, has seen this
type of activity and we anticipate we’ll see it in the U.S.,
too.
Given the amount of emphasis the Obama administra-
tion is placing on infrastructure spending, I think an IPO
market will begin to develop in that sector. There is a
wide range of companies out there that will provide new
technologies, consulting, energy generation and other
services for these infrastructure projects.
However, investors want to see some
ROI back in their pockets before
they’ll take risks. In 2003, it took a
run-up of somewhere around 40%
in the NASDAQ before the IPO
market gained some legs. Bankers
are interested in talking to these
companies. Private equity, too. They
may not be ready to invest, but
they’re listening.
Q. Where are the bright spots, in your opinion?
Macquarie’s expertise has been in financing traditional
infrastructure–roads, airports, energy. So, we see the
stimulus bill spending on infrastructure as an opportunity.
Restructurings are another area.
The middle market shows real possibilities because the
amount of leverage with these deals is not so large. I can
see that the thawing might start here.
It’s important to keep in mind that good deals can still
be done. In this first quarter, Macquarie and its partners
closed on the $7 billion buyout of Puget Energy, a deal
we announced 15 months earlier. During those months
of waiting for regulatory approvals, we kept the deal to-
gether, which shows that a good deal can still be done.
The Pfizer-Wyeth deal is another good example. In that
situation, you’ve got strong companies, and a consortium
of banks has committed to lending a good part of the
cash for the deal. All parties have worked together to set
up a good transaction because it makes sense. ◆
EXPERT VOICES
In M&A, Restructurings will take center stage Q&A
11
C O N T A C T S
Greg FalkNational Leader, M&A Tax
Shawn HessingNational Managing Partner, Private Equity
Drew KoecherNational Services Leader, Restructuring Services
Dan TiemannNational Operations Leader, Transaction Services
“2009 M&A Marketpace Survey” is a sponsored supplement produced by the Custom Media division of The Deal LLC. Data included in this report was derived
from a proprietary survey conducted and complied by KPMG LLP and The Deal LLC in January 2009 on the state and future of
the M&A market. If you would like to receive more information on this proprietary survey
and study, please contact Kristin Coda, Marketing Director, KPMG at 201.505.3614
or by email at [email protected]
◆KPMG LLP, the audit, tax and advisory firm, is the U.S. member firm of KPMG Interna-tional. KPMG International’s member firms have 137,000 professionals, including more
than 7,600 partners, in 144 countries.©2009 KPMG LLP, is U.S. limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
