Why M&A Is About to Pick Up: Report

Audit firm PwC released a new report Wednesday showing it expects a pick-up in mergers and acquisitionsin the U.S. in the second half of the year.


“The uptick in deal value and recent climb in the rate of deals in the second quarter adds to growing levels of businesses looking to execute on transactions,” Martyn Curragh, PwC's U.S. deals leader, said in the report.

In the first six months of the year, the firm has been helping many of its clients prepare for transactions in the second half of the year, he added.

The PwC report also said it sees evidence that S&P 500companies have been saving cash so when they’re ready to make a move, they’ll be ready to go.

In the first half of the year, PwC said there were 3,870 transactions equaling $350 billion dollars in deal value. That’s down from the same period in 2011. But almost 70 percent of that deal value this year came in the second quarter, leading the firm to believe things are about to get busier.

PwC’s recent Global CEO Survey showed that 40 percent of American CEOs plan a buy-out of another company in an emerging market this year.

The firm also highlighted four sectors it believes will be the home of more than their fair share of deals between now and December 31st. On the list: healthcare/pharmaceuticals, financial services, technology and the entertainment industry.

According to PwC, healthcare makes the list because the cloud of uncertainty over the legality of the President Obama’s health plan was lifted by the Supreme Court last month.

Financial services has merger and acquisition potential as troubled European companies divest themselves of U.S. assets. There is also no shortage of U.S. companies, public and private, hoping to scoop them up at discount prices.

Technology is hot and will likely continue to be. PwC said more than a fifth of acquisitions in the U.S. so far this year have been tech related.

According to the report, acquisition activity in the entertainment industry will be driven by large corporations examining their current business plans and potentially making changes, buying and selling. Social media companies will also be jockeying for position in the world of mergers and acquisitions between now and the end of 2012.

— By CNBC's Jason Gewirtz