Companies expect to buy to add top-line growth in their existing businesses in 2011.
Next year looks promising for mergers and acquisitions, with a 36 per cent increase in dealmaking globally, according to a Thomson Reuters survey of corporate decision makers. Bond markets and stock markets are also likely to see new issuance.
With the economy in a grinding recovery, the companies in the survey said that the top two reasons for mergers and acquisitions next year will be to add market share in their current businesses or to expand their geographic scope.
At the bottom end of the list of drivers were acquisitions to cut costs through economies of scale and to add new product lines.
Both bond and stock issuance are predicted to bounce back from a slump in 2010.
Respondents said they expect to be busier in equity capital markets, predicting deal volumes will increase by about a fifth. Canadian bankers may be surprised to find that those surveyed expected commodities to be the industry with the smallest increase, at only 12 per cent.
In the world of lending, the corporate types also predicted an up year for both syndicated loans and bond issuance volumes.
There are some interesting insights into why companies choose advisers, and at least on mergers, their answers signal that boutiques still have a big role to play.
Companies said they don't put very much weighting on an adviser's ability to finance a transaction, preferring to focus on expertise as the No. 1 criterion. (However, one suspects that response is kind of like the one you'd get if you asked people if they married for love or for money. Sometimes, access to the balance sheet from an adviser (or an in-law) is just too crucial.
Companies say they don't put much weight on league tables and trading activity when choosing a merger adviser. It's at the bottom of a long list of factors in the survey. Given the rabid focus at some firms on being No. 1 in the tables because finishing on top is viewed as a huge sales advantage, that particular finding is a bit of a surprise.