Pace of Strategic M&A and LBOs to Continue, Claims Market Makers Survey of M&A, Private Equity and Corporate Executives

Pace of Strategic M&A and LBOs to Continue, Claims Market Makers Survey of M&A, Private Equity and Corporate Executives

May 17, 2007

-  Debt market expected to sustain mega-buyouts
-  SBOs will continue to be most popular exit route
-  Shareholder activism and hedge funds contributing to
ongoing boom


    NEW YORK, May 17 /Xinhua-PRNewswire/ -- mergermarket,
the M&A intelligence and research service, is pleased
to announce the findings of its annual Market Makers
survey.  The study, published in conjunction with Fried,
Frank, Harris, Shriver & Jacobson LLP, is the result of
150 interviews with prominent private equity professionals,
M&A bankers, and corporate CEOs in both the US and
Europe, designed to gauge expectations and opinions on the
leading issues facing the M&A and private equity
industries.  

    The survey yielded several surprising findings.  While
the availability of cheap debt is regularly cited as a
contributing factor in the ongoing private equity boom,
only 3% of respondents consider such availability a
"principle driver" of mega-buyouts.  Other
trends, such as the popularity of consortium bids and the
opportunity for superior returns compared to smaller
companies, were considered more influential drivers. 
Respondents thus are likely to expect continued mega-buyout
activity regardless of any turn in the credit cycle.  

    Furthermore, respondents clearly favor secondary
buyouts as the exit strategy of choice for today's LBOs,
contrasting with the popular notion that a strategic sale
or IPO exit signals a "successful" buyout. 

    Additional findings from the survey include the
following:
    --  56% of respondents expect large cap strategic
M&A activity to
        continue to increase in 2007
    --  Nearly 50% of respondents see shareholder activism
as a
        catalyst for M&A activity
    --  Respondents believe hedge funds are increasing the
        competition for M&A targets
    --  70% of respondents claim the debt market is
expected to
        sustain leveraged buyouts in 2007, and 73% of
respondents do
        not anticipate major defaults by private equity
portfolio
        companies in 2007
    --  Respondents expect Energy and Financial Services
industries
        to be the leading sectors for large
transformational M&A in
        2007; Healthcare, Business Services, and Energy are
expected
        to be the most attractive sectors for LBOs
    --  Respondents believe the increased use of
consortium/club
        deals is the leading concern for private equity
fund Limited
        Partners
    
    The report, available at
http://www.friedfrank.com/reprints/070501_marketmakers.pdf
, also includes feature articles on the continued momentum
of strategic M&A; the drivers behind the current LBO
boom; and the development of mega-funds in private equity.


    Fried, Frank, Harris, Shriver & Jacobson LLP is a
leading international law firm with more than 600 attorneys
in offices in New York, Washington, D.C., London, Paris,
Frankfurt and Hong Kong. Fried Frank lawyers regularly
represent major investment banking firms, private equity
houses and hedge funds, as well as many of the largest
companies in the world.  The firm offers legal counsel on
M&A, private equity, asset management, capital markets
and corporate finance matters, white-collar criminal
defense and civil litigation, securities regulation,
compliance and enforcement, government contracts,
environmental law and litigation, real estate, tax,
bankruptcy, antitrust, benefits and compensation,
intellectual property and technology, international trade,
and trusts and estates. The firm has an association with
Huen Wong & Co. in Hong Kong.  More information on
Fried Frank can be found at http://www.friedfrank.com.

    mergermarket is part of The Mergermarket Group which
has over 400 employees worldwide and regional head offices
in New York, London and Hong Kong.

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