After hitting an all-time high in 2011, mergers and acquisition activity is expected to remain strong this year.
A PwC report released last week noted there were 3,173 M&A deals worth a total of $189 billion announced in 2011. While the total value of M&A deals was still below the 2007 peak, the number of deals hit a new record.
Lee Davis, managing director at PricewaterhouseCoopers Corporate Finance Inc., said 900 of the deals involved B.C. companies, up from 600 in 2009.
He noted there were 425 deals in B.C. where the deal values were disclosed. Of those, the total value was $25 billion in 2011, up from $14 billion in 2009.
Davis said stock markets will likely remain volatile, making it difficult for companies in sectors other than mining to raise capital.
"We're [therefore] going to see a lot of companies finding their exits by being bought out by strategic investors. This [trend] will grow."
He expected increased M&A activity across many diverse sectors, not just in the resource sector. The PwC report noted strategic buyers have remained motivated to look for target acquisitions, with the number of deal cancellations also hitting an all-time low of 86, which is down significantly from 370 in 2007.
Davis noted that the average mid-market M&A deal in B.C. was roughly $19.7 million last year, up from $15.9 million in 2010 and $10 million in 2009.
"That kind of trend for private business owners is a positive sign that prices are firming up for better companies and a sign that it's probably a good market to consider options that include the sale of the company." •
