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Deloitte: M&A gaining momentum through 2016

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Yet, nearly 90 percent of corporate respondents say some portion of deals fail to generate value.

According to the findings of a new report from professional services firm Deloitte, the vast majority of 2,500 U.S. companies and private equity firms anticipate a sustained or accelerated pace of mergers and acquisitions over the next two years.

Building from the modest rebound of M&A activity in 2013 and the solid rise of deals in the first quarter of 2014, 84% of corporate executives surveyed expect a sustained or increased pace of M&A activity in the next 24 months.  Forty percent of the total corporate executive respondents forecast a pick-up in deal flow. In line with this forecast, the vast majority (89%) of private equity leaders surveyed are expecting average to high deal activity going forward.

"Nine-in-10 corporate executives believe that at least some portion of past deals failed to generate the expected return on investment."

"Given the large amount of cash on corporate balance sheets and low interest rates, and as long as the stock market is steady and rising, the environment is ideal for M&A," said Tom McGee, deputy chief executive officer of Deloitte LLP. "We've seen robust activity recently, and barring a significant geopolitical or other unforeseen event, the stage is set for continued momentum in transaction activity."

Respondents offered a note of caution among the general deal exuberance. Nine-in-10 corporate executives believe that at least some portion of past deals failed to generate the expected return on investment, providing a sobering reminder of the complexity associated with integrating after an M&A transaction. Corporate executives pointed to execution gaps or failure to capture synergies, while private equity respondents cited economic forces as the most likely reason a deal fell short. Moreover, the majority of corporate and private equity respondents cited the failure to integrate effectively as a top area of concern in pursuing a deal.

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