Europe’s wealthy firms look to spend on acquisitions in 2013

Tim Wallace
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MANY BUSINESSES across the Eurozone are in a better position than their economies and governments, and are looking to spend part of their cash piles on acquisitions over the next year, according to top financiers at Deutsche Bank.

Good fundraising conditions for healthy firms mean businesses have the opportunity to snap up other firms or portfolios at relatively low prices, the bank believes.

“The corporate landscape in Europe, the middle east and Africa (EMEA) is healthier than people might expect – many companies have strong balance sheets, cost of capital is low in absolute terms and, combined with non-existent GDP growth, these corporations will eventually redeploy excess cash for acquisitions,” said M&A head Henrik Aslaksen.

“Even in southern Europe there are numerous strong firms which need to expand and will re-invest when the right opportunity emerges.”

In particular Aslaksen expects the steady flow of mid-sized deals in the US – with its relatively healthy economy – to continue to drive growth in the market.

The bank also expects a wider economic recovery to prop up the flow of mergers and acquisitions, assuming that politicians resolve the US fiscal cliff.

Deutsche forecasts an economic recovery in all regions except the Eurozone by the end of 2013, with an acceleration into 2014.