The tide in Canadian mergers and acquisitions activity is finally turning despite a challenging 2003, according to an analysis from KPMG Corporate Finance.

Based on data supplied by Dealogic, the number and value of Canadian M&A deals that closed during 2003 dropped by 34% and 37% respectively from last year, but despite the drop, a more favourable climate for both buyers and sellers created renewed optimism among dealmakers.

In fact, says KPMG, a more telling statistic is the increase in deals in the pipeline: October 2003 recorded the highest monthly value of announced global deal activity since October 2000 and the highest number of deals in any month so far this year.

“There are many positive signs in today’s market: the dollar seems to have reached a relatively stable level, capital markets are open for business and business valuations remain reasonable. Turning the M&A tide may take time, but with the generally positive economic outlook and a pick up in the U.S. economy, our clients are certainly telling us they have renewed confidence that deals can be done,” says Doug Mackay, President of KPMG Corporate Finance in Canada.

Another indication of an impending M&A recovery is the return of the strategic buyer. “For the past couple of years, many companies have been on the sidelines when it comes to M&A activity, focusing instead on operations improvement, cost containment and other internal issues. This appears to be changing with many clients telling us that growth via acquisitions is once again a strategic priority for 2004,” Mackay adds.

KPMG private equity capital continues its active pursuit of M&A opportunities. Globally, the proportion of private equity-backed deals is rising and now accounts for 10% of all deals in value, up from 2% in 2000, and 6% in volume, up from 3% in 2000.

http://www.newswire.ca/en/releases/archive/December2003/15/c2911.html