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Rich Jeanneret, Ernst & Young Transaction Advisory Services, breaks down his latest report on M&A.
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Merger Monday back on the look today's action continue to the rest of the year let's ask rich generated vice chair at transaction advisory services at what alma.
-- -- Joins us now it with exclusively.
With today's report so.
Your fun things though even though -- environment is -- for not sum at China.
Well -- we continue to face global uncertainty it's like roller coaster.
Financial markets today and and the fundamentals remain very strong family -- cash improving credit improving confidence in the global economy but it's a fragile recovery.
And so when you have negative news like you had in Europe over the last few weeks with.
With Spain and Italy and concern about.
What's happening today in in in the Dutch part of the world out -- parliament in the elections of print people are worried about the Euro -- so.
Their -- -- I think fatigue with the volatility in the market so they're being more cautious but they.
Remain bullish on intermediate and an intermediate long term on doing emanate and there's a huge pent up demand so we remain confident.
Intermediate to long term -- looking at tell you report that -- put out today and -- -- one of the questions he was do you expect a company to pursue acquisitions.
Side in the next twelve months about what was at 57% back in April.
2010 stamp to 34%.
Today yeah but chose a considerable loss of confidence well good news is in the US it's been -- and I think that's because US economy's improving better than people thought we got more stability here there's more interest in capital flowing here.
The big issues brought down confidence globally has been the Euro zone and that's been.
Obviously a rapidly -- -- its deteriorating situation over the last two years until you have confidence in stability in the Euro -- Investors are going to stay on the sidelines afraid to deploy large amounts of capital making changing -- -- -- -- big deals you're seeing now are they using debt or cash to finance them.
Interest and -- -- the United States were starting to see you some more credit it's obvious that -- -- fall that it's cheaper than it's ever been.
But combination of cash credit and currency -- stock markets are -- particularly here.
What do you do with the cash they have though is if you know organic growth they put where they just sit on.
Well they're largely sitting I think they are huge pent up demand as I mentioned to deploy it.
Some of it is being reinvested in core cap expenditures people hiring more here in the US you've seen the unemployment rate get better so I think.
It's a combination of organic and organic but more trend towards organic.
So about sectors that we can -- sort a couple of big go moves in pharmaceuticals today is that an area you're expecting more opens what other sectors what we talked about -- lot on your show before we predictor that there -- -- be activity in pharma.
-- -- balance -- certainly for Pfizer that's part of it.
Bomb and the other side of that is more than consumer sector which we we expect to see a lot of focus on consumer.
Brands looking to get stronger there.
Higher gross margin business is -- clearly on the nutritional this is that advisor based on the consumer fentanyl -- for those emerging market at -- my -- consumer companies repositioning around their man I still think you'll see divestiture.
In farm as as as those companies rationalize their portfolios and their balance sheet but but acquisitions as well -- you know acquired this morning focus on their drug pipeline there's a lot of pipeline that -- -- replies to these drugs off -- right police -- -- trend -- where we were seeing an American company.
Merge with a foreign company little.
Overseas and they activity is that coming up and up.
Yeah I think the focus by US investors.
Both in private equity and and in the corporate world on the emerging markets is has been a growing trend we've seen throughout.
Last couple years continued focus on China obviously in Brazil another emerging markets as well.
As people seek greater returns they're given the improving demographics and and the emerging middle class those parts the world yet they're still -- could have fixed thanks so much -- -- extend credit and --
