Global M&A activity to strengthen in 2010: McKinsey

While M&A activity showed signs of resilience in the year 2009, global consulting firm McKinsey analysts Werner Rehm and Carsten Buch Sivertsen said the overall, conditions improved in the fourth quarter, and companies increasingly found attractive deals and the means to complete them.

"That increase in activity appears set to continue in 2010, if current trends continue," they added.

The era of highly undervalued assets is probably over as markets have showed significant signs of improvement since March 2009.

"We expect large corporate buyers will be particularly well positioned to take advantage of any new wave of M&A, but we also see private-equity firms returning to the market," McKinsey said in its report.

Meanwhile, both the credit and the equity markets are again financing M&A deals and this in turn is likely to boost M&A activity.

Credit spreads are back to reasonable (though not pre-crisis) levels, and the IPO market, virtually closed in the first half of the year, is now trending toward a 40 per cent increase over 2008, the report said.

The report further said "if a wave of M&A does materialise, as many expect, large public companies should be particularly well positioned to benefit."

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