Merger & acquisition (M&A) activity hit record levels in 1999. According to a forecast by the Transaction Services group of PricewaterhousCoopers, M&A activity could increase even more dramatically in 2000.
Several factors will drive the growth. First, there’s a lot of money out in the market that will make M&As easy. There is an unprecedented supply of capital right now. Second, in business circles, a lack of growth will be punished – growth will become the new indicator of success for companies. Finally, there is the human resource side of M&A activity. Companies will look to M&As so that they can secure the critical professional talent needed to survive in the 21st Century.
PwC forecasts that there will be a number of mergers and acquisitions across traditional industry lines. For example, manufacturers may acquire a service provider to help with consumers’ expectations of what a product is and how it is presented. Instead of outsourcing expertise, companies will simply acquire it.
Robert Filek, Multinational Transaction Services leader at PricewaterhouseCoopers, said, “The only thing that is certain about the New Millenium is change – change at a faster pace than we have ever known. In business, mergers & acquisitions will be a primary tool to effect this change. But the winners will be ones that move beyond the easy availability of capital to use M&A to meet their customers’ needs, to attract the best talent in their industry, and to break through their industry and functional barriers to redefine their industry.”