Bankers have been saying for weeks that their merger pipelines are surprisingly full, given the murky outlook for markets and the economy.
But then, bankers always say their pipelines are full. When companies expect deals, it's more telling, and that's exactly what Thomson Reuters found in a new survey.
Corporations polled by the information company say they expect a substantial gain in acquisition activity as companies seek revenue growth. Financings, too, are expected to gain both in debt and equity, though not quite at as fast a pace.
The survey, done with Freeman Consulting Services, found that respondents expect a 22 per cent increase in M&A in 2012. Every industry but one cited revenue growth as the top priority in 2012 as cost-cutting your way to profit growth has largely run its course.
Of course, all of those expectations could go out the window, given that the survey coincided with a big drop in markets and the upheaval in Europe.
"There is headline risk and macroeconomic risk around a lot of these expectations," said Matt Toole, director of deals intelligence at Thomson Reuters, on a webcast Friday.
Thomson surveyed 175 executives from a variety of sectors, including financials, energy, industrials and retail. They came from all around the world.
Look for acquisitions in Latin America and the more developed areas of Asia, which were deemed the most compelling, while companies are largely avoiding Europe.
There's also likely to be companies and assets for sale, as listing them on public markets is unattractive.
The executives surveyed said that companies looking to divest assets are likely to look at outright sales rather than initial public offerings. Health care and technology companies were particularly dour about their IPO prospects, the survey found.
Buyers are going to be looking for revenue growth that has been hard to come by in recent years.
Funding acquisitions was cited most often as the top use of cash, even above capital spending. Dividends, share repurchases, debt retirement and hiring were well down the list.
While the merger bankers are expected to be markedly busy, it's expected to be less of a change for bankers working on financings.
Equity issuance is expected to be up about 11 per cent from a slow 2011, putting it in line with the totals from 2009 and 2008. Bond and loan issuance are also expected to post gains in the 6-7 per cent range.Report Typo/Error