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State’s Merger Outlook Bullish / The Patriot Ledger

01/09/2006 - The Patriot Ledger byJon Chesto
Bay State deal-makers have become significantly more upbeat during the past six months about the outlook for merger and acquisition activity.

The latest Association for Corporate Growth/Thomson Financial poll shows that confidence levels in the M&A environment have reached their highest point in the history of the survey.

About 92 percent of the Massachusetts investment bankers, private equity fund managers and corporate executives polled described the current environment for mergers and acquisitions as either "good" or "excellent."

That's up from the 77 percent who expressed those opinions in two previous polls in June and in the same survey a year ago.

"There's just more confidence in the market," said Jay Jester, managing director of the Audax Group, a private equity firm in Boston. "Everybody is talking a big game about what's coming our way."

Jester said one of the big reasons for the optimism is the fact that the M&A market has been hot for nearly two years now, with the flow of deals continuing unabated despite record high fuel prices, the continuing war in Iraq and disasters such as Hurricane Katrina.

"All of the things that seemed like they had the potential to stall the positive momentum, we've lived with and people have, in general, learned to adjust to them and operate in that environment," Jester said.

Another factor, according to Mirus Capital Advisors President Elliot Williams, is the return to the market of strategic buyers who want to expand their products and services by complementing what they currently offer through acquisitions. Williams said those types of buyers had retreated from the M&A scene for several years - as opposed to private equity firms that eventually plan to turn the acquired firms around and sell them.

"We're seeing large companies across a variety of industries going in and buying smaller businesses to fill gaps," said Williams, whose firm is an investment bank in Burlington.

High-tech and life sciences again appear to be the hottest industries for mergers and acquisitions in 2006 in Massachusetts.

But Williams said it doesn’t appear that the hyperactive, speculative deal-making environment that the state saw six years ago will return anytime soon.

"Despite the fact that we're seeing good volumes, we're seeing deals that make sense," Williams said. "We're seeing people put the right discipline in place in terms of due diligence."

Jon Chesto may be reached at jchesto@ledger.com.

Copyright 2006 The Patriot Ledger
Transmitted Monday, January 09, 2006



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