Mergers and acquisitions professionals preparing for deal volume increase, survey says

A new survey from Grant Thornton LLP has found that a majority of professionals in mergers and acquisitions (M&A) are preparing for deal volumes to increase.

The survey, which polled 238 M&A professionals, found that 81 percent of respondents expect deal volume to increase over the next six months. Two thirds of the respondents (67 percent) said they were optimistic about the U.S. economy due to stable or lower interest rates, technology innovations and stabilized or reduced inflation. Additionally, 60 percent said they felt the presidential election would have no effect on their M&A plans.

“The amount of sell-side work we’re seeing right now should translate into increased volume when these opportunities hit the market in the next couple of months,” Elliot Findlay, national managing principal of Transaction Advisory at Grant Thornton, said. “There are a lot of positive tailwinds right now, and the market is indicating that volumes will pick up.”

However, the value predictions for M&A deals are expected to be lower. Only 41 percent of respondents expect valuations to increase over the next six months, and 40 percent anticipate them staying the same. Respondents to the survey said recent deal volume decrease was due to a misalignment in valuation expectations between sellers and buyers. The misalignment is leading to more due diligence by buyers into more than financial metrics, and into areas like human capital, supply chain and technology capabilities.

“In the recent exits I’ve advised clients on, the amount of diligence that we’ve gone through has been immense, and we were on the sell side,” Grant Thornton Transaction Advisory Partner Bill Pollatos said. “You need to take your time, do it right the first time, go deep and make sure you’re well-presented as you go into a sale process.”

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