Entrepreneurs signaling slowdown in M&A

BVWireIssue #55-2
April 11, 2007

Owners and senior managers of mid-market private companies indicate that 2006 could be the year the M&A bubble burst, according to the just-released 2007 DAK Group/Columbia Business School Study.  For the first time since 2002, responding managers say they expected their company revenues to decline, and the number planning to sell in the coming year dropped to 27% (from a high of 33% in 2005).  “Ironically, this trend shift comes on the heels of the best year in M&A since 2000,” says New York Business Journal, “and it contradicts the general belief by experts and practitioners that signs for continued M&A growth remain positive.”

Other downward indicators: More than half of respondents cited general economic conditions as the primary obstacle to growth, and the number expecting to decrease 2007 capital expenditures more than quadrupled, from 4% in 2006 to 19% now.  Less than three-fourths believe their businesses increased in value in 2006 (compared to 79% in 2005), while only 75% believe that this year will boost their business values (down from 87%).

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