Deloitte has released its first annual report on mergers and acquisitions activity in the U.S., indicating a generally positive M&A outlook among 2,500 companies and private equity firms over the next two years.
Deloitte’s “M&A Trends Report 2014: A comprehensive look at the M&A market” shows 84 percent of corporate executive respondents see a sustained or increased momentum in M&A activity, the company said Friday.
“Given the large amount of cash on corporate balance sheets and low interest rates, and as long as the stock market is steady and rising, the environment is ideal for M&A,” said Tom McGee, deputy chief executive officer at Deloitte.
The majority of respondents also project average to high deal activity based on activity in the first quarter of this year, although not all past deals were seen as successful due to a failure to integrate post-transaction, synergy gaps and economic forces.
Other key findings from the survey include the following:
- 21 percent of large companies plan major deals, while 32 percent of corporate executives say they prefer smaller deals.
- 43 percent will pursue M&A to expand customer base, 32 percent to generate cost synergies or scale efficiencies and 31 percent to enter other geographic markets.
- 71 percent of private equity respondents use data analytics in M&A analysis compared to 58 percent of corporate executives.
- 33 percent of private equity leaders see the U.K. as the top overseas market, while corporate leaders point to China.
- The technology sector is expected to see the most deal activity.
Deloitte commissioned OnResearch to conduct the survey of 2,182 corporate executives and 318 private equity leaders between March 17 and April 21.
According to McGee, “[the survey] provides insights on what drives deal success and the steps corporate and private equity executives should focus on to make the most of their investments.”