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M&A set for 25 per cent rise, say analysts

28 January 2011

Experts have predicted a 25 per cent increase in mergers and acquisitions (M&A) this year as companies seek to deploy large cash reserves.

Citigroup's analysts said the total value of global deals will hit an estimated $2.9 trillion (£1.8 trillion) by the end of 2011, up from $2.2 trillion last year, Reuters reports.

Although this figure remains significantly below the 2007 record of $4.2 trillion, it would place this year's M&A volumes in line with the tally for 2008.

The Citigroup analysts said their prediction was based on "a statistical analysis of past M&A volumes, projected corporate earnings, valuations and confidence indicators".

They added that companies are thought to be holding about $4 trillion in cash and will have to decide whether to seek growth through deals, strengthen their balance sheets further or hand cash back to shareholders.

Earlier this month, global head of M&A at Morgan Stanley Rob Kindler told the Financial Times that 2011 will be a significant year for deal-making if major transactions make a comeback.

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Categories: Commercial


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