KPMG: 2010 Looks Good for Swiss M&A
The previous year has set a good starting point for Swiss M&A activities in 2011, with the total value of deals having surpassed that in 2009 to stabilize acquisition activities this year, KPMG’s “M&A Yearbook 2011” suggests.
Executives of Swiss companies that are active in the international arena “ have systematically analyzed and prepared both strategic alternatives and potential acquisitions in order to ensure their long-term development, particularly in growth markets. The signs of the times look good for Swiss companies,” KPMG said.
In 2010, the total number of M&A in Switzerland fell to 262 compared with 2009 that saw 274 deals, but its volume rose 13 percent higher to US$87.6 billion than in the previous year.
KPMG said this trend has paved the way for better M&A activities of several industries in 2011, including the private equity sector, pharmaceutical, chemical industries, financial services sector which is expected to merge with private banking, export-led industrial markets, consumer markets, technology, renewable energy, and commodities.
However, the firm admitted some inhibiting factors that are attributable to the fallout of the 2008 credit crunch continue to put their restraints on M&A activities.
“The most important of these concern exchange rate trends between the dollar, yuan and euro as well as – particularly from a Swiss perspective – questions concerning how the Swiss franc will fare in the future,” KPMG said.
In addition, “instability in the governmental budgets of the USA, several EU member states and other countries” help drag the rate of M&A activities behind, the report said.
“Exchange rate fluctuations and budget deficits are also symptoms of a constant, long-term shift in global economic powers which clearly highlight the fierce economic competition taking place between the various countries and regions,” KPMG added.
The report presents an “above-average involvement” of Swiss companies in M&A activities as buyers, with the number of foreign companies acquired by Swiss firms having surpassed the number of Swiss firms that fell into foreign acquisition. They are on the lookout for growth markets, KPMG said, adding that it “ further strengthens Switzerland as a business location.”
KPMG stressed that “the starting point for Swiss companies is positive and there are good reasons to look to Switzerland’s 2011 M&A year with optimism.”