ACG/Thomson Year-End 2007 DealMakers Survey Finds Midwest Merger Pros Still Positive

CHICAGO, December 17, 2007 – 2007 will go down in the books as a record year in worldwide mergers and acquisitions, and nationwide nearly three-quarters of merger professionals have a positive view of the current M&A environment. The Chicago professionals are even more positive with 86 percent looking forward to a good or excellent 2008, according to the ACG/Thomson DealMakers Survey.

This strong percent is a drop from 97 percent in June 2007 but is the strongest region in the country. It is perhaps best depicted by Jim McNair, Senior Managing Director of Corinthian Capital and Executive Vice President of ACG Chicago who said, “I am as positive as I have been for 24 years in my area of the middle market.”

Nationwide dealmakers anticipate fewer buyouts in the next six months (76%), and more distressed deals (100%). However, 81 percent say they are not modifying their investment strategy. “The credit market is more robust for the smaller middle market deals,” noted David Gezon, Senior Managing Director at Midwest Mezzanine Funds, “and while many think of small local firms in the target market we expect that strength to continue driving regional and nationwide growth through firms located across the country.”

Chicago investment professionals are also increasingly looking at cross-border deals, according to survey results. While 41 percent of respondents have not done a cross-border transaction in the last year, 68 percent believe that they will be doing a cross-border deal in the next six months, with 29 percent saying it is somewhat likely, and 39 percent saying it is very likely. Western Europe (78%), Canada (64%), China (50%), and are the areas in which they are most likely be involved.

“The positive view of M&A activity and the proactive reach into the global markets continue to show the strength of the middle markets served by the Chicago professionals” said Craig Miller, CEO of ACG Chicago. “In the last few months, the subprime mortgage credit crisis has clearly had an impact on dealmakers’ sentiment but this is having a greater affect on larger sized buyouts that utilized syndicated debt for leverage.”

Miller continued, “Our annual October private equity conference drew record attendance of over 1,400 with substantial deal activity. Middle market buyouts, which rely more on relationship lending, are closing at a steady pace even though caution is in the air. Just a few weeks ago our venture forum was sold out with many of the innovative new opportunities scheduling due diligence by the end of the day. With Chicago clearly established as a global business center, our dealmakers continue to expand their expertise and networks globally to take advantage of investment opportunities outside of the U.S. as well as working with foreign entities since the weak dollar is starting to attract non-U.S. investors. All in all, strategic M&A and private equity looks to remain a vibrant driver of the Chicago region.”

The ACG/Thomson DealMakers Survey, completed twice yearly by the Association for Corporate Growth (ACG) and Thomson Financial, polled 813 investment bankers, private equity professionals, corporate development officers, as well as lawyers, accountants, consultants and other service providers involved in the deal economy in November 2007. 71 respondents were from Chicago.

Through mid-December, worldwide-announced M&A activity shattered all previous records to reach US$4.35 trillion, a 20 percent increase over last year’s record year, according to Thomson Financial. However, as global market conditions worsened in the second half of the year, M&A saw a 30 percent decrease from the record-breaking first half. Cross-border M&A activity contributed to much of this year’s volume, accounting for a record 47 percent of announced deals this year.

“The high degree of optimism that characterized the private equity buyout market at the start of the year has been replaced by a great deal of caution at the end of 2007,” according to Robert Keiser, Vice President/ Proprietary Research at Thomson Financial.

Private equity buyout activity accounted for as much as 41 percent of total announced US M&A activity as of the first week of July according to data compiled by Thomson Financial, but has only averaged about 15 percent of weekly announced M&A over the second half of this year. “This clearly portrays how damaging the credit-crunch has been to the business model of private equity firms, and especially the firms that specialize in the larger, so-called mega-deals,” said Kaiser. “The extent that private equity insiders remain cautiously optimistic about the deal making environment heading into 2008 can be explained by the fact that the vast majority of buyouts are categorized as smaller to middle-market sized deals, which continue to be announced at the lower end of what is historically considered a normal run-rate for announced deals.”

The survey points to more of a balance of power between buyers and sellers of companies. In the new survey, 33 percent of Chicago dealmakers say it is a Buyer’s market, 36 percent say it is a Seller’s market, 30 percent are not sure.

Sixty-three percent of private equity professionals say the amount of private equity capital available for investment is either much too high (36%) or a little higher than it should be (27%). Not surprisingly, private equity firms identify the greatest threats to their industry as the credit crunch (45%), and competition with other private equity firms (20%).

More than half (52%) of dealmakers say the debt markets will be much better (25%) or a little better (15%) one year from now, while 15 percent say they will be the same, 40 percent say they will be a little worse.

Survey Methodology
The survey, conducted in November 2007, was completed by 813 ACG members and Thomson Financial customers, including 71 from Chicago. Chicago respondents were comprised of private equity, venture capital and buyout firm members (21%); investment bankers, intermediaries, brokers (23%); lenders, finance providers (17%); corporate professionals, entrepreneurs (10%); and service providers, such as lawyers, workout specialists, accountants and consultants (30%).

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Jason Abrahams
KemperLesnik
312-755-3533
jason.abrahams@kemperlesnik.com

About ACG Chicago
ACG Chicago is Northern Illinois' premier association for corporate development, investment, and merger and acquisition professionals. A leader in the Association for Corporate Growth (ACG) global network, ACG Chicago boasts a membership of almost 1000 foremost authorities who form a diverse and knowledgeable network of corporate executives, capital sources, corporate advisors and service providers that all share a strong commitment to leadership in the field of strategic corporate growth. ACG Chicago, recipient of the 2006-2007 Outstanding Chapter Programming Award, provides its members with professional and business opportunities as well as the most current information through its ongoing luncheon series, breakfast seminars, regional conferences, in-depth publications and social events. For more information please visit www.acgchicago.com.

About ACG
Founded in 1954, the Association for Corporate Growth (ACG) is a global association for professionals involved in corporate growth, corporate development, and mergers and acquisitions. Today ACG stands at more than 11,000 members from corporations, private equity, finance, and professional service firms representing Fortune 1000, FTSE 100, and mid-market companies in 53 chapters in North America and Europe.

About Thomson Financial
Thomson Financial, with 2006 revenues of US$2 billion, is a provider of information and technology solutions to the worldwide financial community. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation (www.thomson.com), a global leader in providing essential electronic workflow solutions to business and professional customers. With operational headquarters in Stamford, Conn., Thomson provides value-added information, software tools and applications to professionals in the fields of law, tax, accounting, financial services, scientific research and healthcare. The Corporation’s common shares are listed on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC).

This release was published on openPR.