The mergers and acquisitions markets is set to grow in 2010 with the technology sector offering the strongest potential for deals according to KPMG.
Its Global M&A Predictor suggests analysts overestimated corporate earnings in 2009 – by some 20 per cent - skewing a clear view of the market for deals. But it says with latest company earnings forecasts looking far more sensible, the M&A market is set to make a modest return in 2010, both in the UK and globally. It suggests forward price to earnings ratios are now 7 per cent higher compared with last year’s adjusted figure, suggesting a gentle increase in corporate appetite for deals. Debt is also expected to decline giving firms more capacity for deals.
Charles le Strange Meakin, technology partner at KPMG in Cambridge, said: “Technology companies have generally exhibited relatively strong financial performance, in volatile conditions, with a resultant increase in share price. Coupled with the comparatively low debt levels and, in many cases, sizeable cash piles, it would not be at all surprising to see the technology sector lead the way in driving forward mergers and acquisitions activity on a global basis. Equally, to the extent that the IPO pipeline materialises, technology companies are likely to feature strongly."
