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Bulls remain out on M&A, US economy for second half of 2015

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Bulls remain out on M&A, US economy for second half of 2015

It’s a seller’s market.

For the second half of 2015, deal flow involving U.S. companies is expected to increase (39.5% percent) and the US economy is expected to continue to improve (62.2%), according to a May poll by professional services firm Deloitte. Nearly half of respondents (47.5%) said they do not believe the US dollar had peaked yet.

Of respondents whose organizations are contemplating transactions, 45.2% expect the deals will occur in North America — a 5.2% increase since a similar Deloitte poll in May 2013.

"We're truly in a seller's market for business owners looking to take some cash off the table."

"The 2015 deal market has definitely been frothy thus far. While North America has the largest volume of domestic deal activity presently, there is still plenty of inbound and outbound cross-border activity as well.  We see plenty of non-US strategic and financial buyers aggressively bidding on US assets, although they are having to deal with significant competition from their local counterparts," said Kevan Flanigan, national managing director, Deloitte Corporate Finance LLC.

When asked about the greatest challenge to deal flow in the second half of 2015, respondents indicated that corporate cash stockpiling instead of spending it was the principal impediment.  Problems in the Eurozone and China's economy were also cited as challenges.

"Many companies have accumulated huge piles of cash that continue to grow," Ira Kalish, chief global economist, Deloitte Touche Tohmatsu Limited. "The continued strength of the U.S. dollar has made assets in other countries relatively cheap, which could spark more cross-border M&A activity in the second half of 2015."

Flanigan added, "There is aggressive competition to invest in performing companies by both financial and non-financial institutions who want to put their money to work through everything from mergers, acquisitions and divestitures, to minority and majority recapitalizations, to debt refinancing. Liquidity alternatives available to well-managed private companies are as strong as we have seen at present. We're truly in a seller's market for business owners looking to take some cash off the table."

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