New Delhi, July 16 (UNI) A KPMG global survey of Mergers and Acquisition activity has found that a world-level slowdown in such activity is finding its reflection in India, with a fall in the value of transactions consummated and a change in the business sentiment relating to M&As.
The survey expects the M&A market in India to affect moderate activity for the rest of the year with the theme being more of consolidation and rebalancing of business portfolios than aggressive growth intiatives of the past year.
In short, the sentiment to prevail will be more in the nature of cautious optimism and rationalisation of business strategies.
Here are some assessments by the study of the global scenario relating to M&A activity: -- further reductions are likely to occur in levels of both deal value and volume, with KPMG's forward looking corporate valuations down 10 per cent compared to six months ago; -- for the first time since it began, KPMG's Predictor shows a decrease in both 'appetite' (forward valuations) and 'capacity' (estimated net debt to EBITDA) for M&A activity; -- previous pockets of regional resistance likely to give way to broad-based fall in deals across all regions and sectors; -- The KPMG Corporate Finance's Global M&A Predictor forecasts a continued fall in global M&A activity, in the second half of 2008; -- The Predictor provides compelling evidence of a decreasing appetite for deals and deterioration in the capacity to do deals globally; -- Stephen Barrett, Global Chair, KPMG's Corporate Finance practice, commented, ''our latest forward-looking statistics suggest that the next 12 months will become increasingly difficult for transactions right across the globe. Although six months ago, forward PE ratios in Europe and the US were down marginally, the Asia Pacific region saw ratios move forward strongly from 17-19 times. This time, all regions, bar Latin America (which has risen by 6.3 per cent), have shown a fall in their respective forward PE ratios with the most rapid fall being for Africa and West Asia (down 13.9 per cent), followed by Europe (down 12.3 per cent), Asia Pacific (down 10.7 per cent) and North America (down 8.7 per cent); -- At the same time, whilst balance sheet capacity remains robust, the Predictor is showing deterioration in net debt to EBITDA ratios across the board; -- The biggest drop in forward PE was witnessed by Basic Materials Africa and West Asia, followed by Telecommunications Europe and Telecommunications Asia Pacific.
KPMG's Global M&A Predictor tracks 12 month forward Price to Earnings (PE) multiples and estimated net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) ratios to track and establish the potential direction of M&A activity.
KPMG's Global 1,000 comprises 1,000 of the largest companies in the world by market capitalisation, with a representative weighting of countries and sectors, to help ensure appropriate inclusion.
A Global 1,000 panel of KPMG firms' professionals sits every half-year and reviews the constituents of the index to seek to ensure that it remains reflective of global changes in regional and sector weightings.
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