Manufacturing

M&A activity in the manufacturing industry declined significantly in 2008, according to a report prepared by PricewaterhouseCoopers. Overall deal volume decreased 32 percent and deal value fell 57 percent when compared to 2007 levels.

Total deal value reached $39 billion in 2008, less than half of the $88 billion raised in 2007. The dramatic decline in deal value can be attributed to a drop in large deals with a disclosed deal value of at least $1 billion. The decline in large deals occurred because of turbulent credit markets and tighter lending practices.

Deal volume in 2008 (141) fell short of the 206 deals completed in 2007. Deal volume is based on deals with a disclosed value of at least $50 million.

In 2009 deal activity likely will increase as the economy improves and anxieties over the global recession diminish. Manufacturers in a strong cash position will be able to acquire distressed firms at low prices. The industry should see greater deal activity in 2010.

During the first quarter of 2009, executives from 62 U.S.-based manufacturing firms were interviewed about their expectations for the rest of 2009 and 2010. Overall, the executives projected more stability, if not improvement, in early 2010. They also projected a slight revenue decline for 2009.

Still, there are glimmers of an economic upturn with an increase in the number of companies estimating positive growth.

Sources